Railway System Market

Market Overview

The global railway system market size was valued at USD 30.26 billion in 2022. It is estimated to reach USD 47.75 billion by 2031, growing at a CAGR of 5.2% during the forecast period (2023–2031).

The railway system includes several products and services that help the rail sector be managed more effectively. Various activities, such as traffic planning, operation management, power supply and infrastructure management, maintenance and support, station control and communication network, rail-facility information management, and others, are included in the railway systems. In addition, rail traffic management systems, rail asset management systems, rail operation management systems, rail control systems, and rail maintenance management systems are some of the major tools used in railway management systems.

The railway management system offers energy management, better operation and control, data analytics, asset management, traffic planning, staff and passenger information management, and others. Advanced digital communication and on-train processing are also employed in modern railway systems to monitor train speed and location.

Highlights

• Propulsion dominates the system-type segment
• Freight wagons dominate the type segment
• Cargo train dominates the end-user segment
• Europe is the highest shareholder in the global market

Market Dynamics

Market Drivers

Rising Demand for Safe, Secure, and Efficient Transport System

The World Health Organization (WHO) fact sheet states that 1.25 million people die each year due to traffic accidents, making road traffic injuries the top cause of mortality for those between the ages of 15 and 29. Traffic accidents cost individuals, their families, and nations much money. Hence, the growing demand for a reliable, secure, and effective transportation system has substantially impacted the development of the worldwide global market. This is attributed to railway transportation being considered the safest and most economical mode of transportation, boosting the demand for railways.

Additionally, the latest trains have onboard cameras, sensors, and communication devices. Such trains run underground or at the ground level in most locations and are highly secured by fences or walls to prevent trespassing, propelling the market's growth. In addition, modern advanced trains consume less energy due to their better acceleration, traction, and braking system, reducing energy consumption by around 30% based on the degree of automation. Such advanced trains can provide a flexible way to coordinate in frequency, improving the system performance in all aspects, thus boosting the market's growth.

Increased Budget for Railways Development

Developing countries like China, India, and others are focused on developing their railway infrastructure by allocating a higher budget. For instance, India increased its budget allocation to the railway industry from USD 18.8 billion in 2017 to USD 21.2 billion in 2018, or a 13% increase. Similarly, numerous nations worldwide are consistently raising their budgets for rail to implement the newest technologies and enhance their infrastructure. For instance, the Canadian National Railway (CN) intended to spend USD 2.92 billion on improving the railway infrastructure in the province of Saskatchewan. Therefore, an upsurge in budget allocation is a significant aspect driving the growth of the global markets.

Market Restraint:

High Capital Requirement

Rail transportation can be considered as the enabler of economic progress owing to the rise in the use of public transport services as a solution to minimize traffic congestion coupled with the cheapest and safest mode of transportation, which is used to transport goods/products as well as cargo/freight. However, one of the key restraints of the global market is the capital-intensive nature of the market, as the cost of trains is significantly high.

For instance, in April 2018, Indian Railways revealed that it is ready to launch its first 12,000 horsepower (HP) electric locomotive. The complete project is expected to cost around USD 200 billion to roll out 800 high-horsepower locos over 11 years, in which the average cost of each locomotive is estimated to be USD 250 million. This indicates the high capital requirement to build and maintain the train network, which is expected to hamper the market growth.

Market Opportunities:

Infrastructural Improvement of Railways in Developing Countries

Rolling stock infrastructure within a country increases the speed and efficiency of railway systems for freight and passenger transportation. In addition, implementing autonomous trains must be backed up by a large investment. Governments of developing countries are investing significantly to meet the latest end-use setups required for autonomous trains. For instance, India invested USD 1.97 billion in 2018 toward its infrastructure development to meet the latest automation demand. It was also estimated to invest USD 777.73 billion by 2022 to cater to the required infrastructure demand, including railway infrastructure development.

Similarly, Paris allocated USD 28.2 billion to automate its old metro network by constructing four new metro lines across Paris to expand the existing lines. Such improvements in developing countries provide remarkable growth opportunities for the participants operating in the market.

Regional Analysis

Europe Dominates the Global Market

Based on region, the global railway system market is bifurcated into North America, Europe, Asia-Pacific, and LAMEA.

Europe held the most significant global railway system market shareholder and is anticipated to exhibit a CAGR of 3.8% during the forecast period. Europe's railway system market is anticipated to exhibit a remarkable expansion rate during the forecast period owing to an increase in the use of public transport and demand for safe, secure, and efficient transportation. UK, France, Germany, Russia, and several other countries are studied in Europe. These countries are highly developed in train automation, and most countries, such as France, Germany, and others, presently have fully automated trains. They also serve passengers and the freight segment within their country, most of which are automatically controlled from the control station. Such trains are well-equipped with the latest technologies and are continuously upgraded to meet the latest trends.

Asia-Pacific is estimated to exhibit a CAGR of 6.7% over the forecast period. The largest increase is anticipated in Asia-Pacific due to the region's rapid adoption of new technologies and significant financial commitment to digital transformation. In addition, the rising GDP of countries like Australia, Singapore, China, Korea, Hong Kong, and India is another factor driving market expansion. The train automation industry in the Asia-Pacific region is well-equipped with the latest technologies, such as communications-based train control (CBTC), European rail traffic management system (ERTMS), automatic train control (ATC), and others in their railway tracks, making the system secure and efficient.

Furthermore, the Asia-Pacific railway system market is expected to grow due to the rising population and increased funding for railroad development. India, one of the economies with the quickest expansion rate, is actively investing in expanding its railway services. The country's railway ministry allocated USD 22.4 billion in funding for network expansion in the 2020–21 fiscal year. India hopes to accomplish this by installing online rolling stock monitoring systems, implementing an ERP system, constructing wireless corridors, utilizing heavy-duty freight trains, and developing specialist R&D centers.

North America includes countries such as the U.S., Canada, and Mexico. U.S. accounts for the highest market share, owing to considerable freight shipments and complex rail network infrastructure coupled with rail automation. Prominent providers of products and services related to rails are signing contracts for developing and installing new advanced technologies in the metro network in this region. For instance, on January 9, 2020, Hitachi Rail STS USA won a contract of USD 798 million to roll out the communication-based train control in the San Francisco Bay Area's BART metro network.

LAMEA includes Latin America and the Middle East and Africa. The countries included in the Latin America region are Colombia, Brazil, Cuba, Chile, and others. The countries included in the Middle East region are Israel, Iran, Turkey, UAE, and others, while in Africa, the countries considered are South Africa, Zimbabwe, Algeria, and others. The contribution of this region to the global market is low compared to other regions and holds remarkable growth opportunities for the players operating in the railway system market.

Segmental Analysis

The global railway system market is segmented by system type, type, and end-user.

Based on system type, the global market is divided into auxiliary power, HVAC, propulsion, onboard vehicle control, train information, and train safety. 

The propulsion segment is the highest significant contributor to the market and is estimated to exhibit a CAGR of 4.71% over the forecast period. The propulsion system can be defined as the mechanism used to produce force to drive the locomotive in railways. This segment is the highest contributing segment in the system type and is anticipated to maintain its lead during the forecast period. Factors such as the rise in demand for safe and secure public transport drive the demand for the railway, which drives the propulsion market.

A train information system is a web-based application that provides real-time train data on freight and international freight trains. It facilitates global railway management. In addition, the relevant data required is collected directly from the infrastructure manager's system. The companies will improve the electronic estimated time of arrival (EETA) and estimated time of arrival (ETA) to support the railway sector in managing the logistical chain and international traffic.

In addition, a data qualifier will be used for the calculations to assess the reliability of the messages provided at the national level. Trains information message processing will be re-engineered to make it more capable and powerful for handling the extensive volume of messages in the future.

Based on type, the global market is segmented into locomotives, metros, monorails, trams, freight wagons, passenger coaches, and others. 

The freight wagons segment owns the highest market share and is estimated to exhibit a CAGR of 3.8% during the forecast period. Rail wagons are used for cargo/goods shipments or freight shipments. Freight wagons are not self-propelled in most cases. Open wagons, covered wagons, refrigerated wagons, flat wagons, wagons with open roofs, tank wagons, and others are the types of freight wagons. Rail freight offers various commercial advantages, such as increased reliability in freight transportation, improved speed, and cost-effectiveness, which drive market growth. In addition, it benefits society by reducing harmful emissions and congestion by reducing carbon dioxide (CO2) emissions by up to 76% compared to road transportation, which boosts the market growth. The rise in freight transportation creates numerous opportunities for players operating in the market.

High-capacity public transportation, or metro, is particularly prevalent in cities. Metros are electronically controlled and have dedicated lanes off-limits to pedestrians and other vehicles. Most metros are grade-separated and run on elevated trains or in tunnels. Two rails or beams make up a metro track. The metro railway system is the most efficient rail transportation in terms of space occupancy, energy consumption, and number of passengers transported from source to destination, which is boosting the market growth. In addition, metros are much faster and more frequent due to advanced rail tracks. Metro automation is opportunistic for the key players operating in the market.

Based on end-user, the global market is bifurcated into passenger transit and cargo train. 

The cargo train segment dominates the global market and is projected to exhibit a CAGR of 4.7% over the forecast period. A cargo train is a series of wagons connected to a locomotive that transports cargo from one place to another. The included cargo is a component of logistic chain management and can be of any type, from liquid to goods. Several companies opt for train transportation to carry their goods. For instance, an Australian mining company, Rio Tinto, implemented GoA 4 in its freight trains carrying ores to a distance of 100 km without any driver on the train. Similarly, Germany is working on cargo caps to transport packages in electric pods.

Passenger transits are intended to carry only passengers from one location to another. Automated passenger metros and transits operate in almost every part of the globe, carrying millions of passengers. The market for passenger transit is driven majorly due to the population increase. In addition, the train serves as the cheapest transportation mode, fueling the market growth. Hence, developing countries primarily rely on passenger transit to travel. Autonomous passenger trains/metros will reduce overheads and result in increased frequency of trains coupled with efficient trip turnaround and enhanced safety, which boosts the global market growth.

Recent Developments

• June 2023- Transmission tower manufacturer KEC International received two orders worth Rs 600 crore for the Kavach system, also known as the Train Collision Avoidance System (TCAS), its MD and CEO Vimal Kejriwal told CNBC-TV18.
• June 2023- HFCL Limited, a manufacturer of telecommunications apparatus, announced that the Delhi Metro Rail Corporation had awarded it a contract worth Rs 809.2 million (DMRC). As per the press release, the company will establish the Fibre Optics Transmission System (FOTS) for the Delhi Metro Rail Project.