Rolling stock Market

The rolling stock market is a dynamic market and is expected to witness moderate growth during the forecast period. The demand for rolling stock is poised to be driven by an increase in the demand for energy efficient transport and growing adoption of public transport. However, the growth of the market can be hindered by the high capital investment required to establish a presence in the competitive global market.

The transport sector accounts for more than half of the global energy demand and around 25% of the global CO2 emissions from fuel combustion. Thus, change in the mode of transportation is fundamental to achieving energy efficiency, globally. The energy efficiency in transport is described in terms of fuel consumption of coal, diesel, and gasoline, among others, which is measured in terms of meter per Joule (m/j), whilst the energy consumption in transport is measured in terms of Joules per meter (J/m). Actual energy consumption depends on gradients, speeds, and loading and stopping patterns. The growing income and population in emerging nations, increasing long-distance travel, and growing focus of different governing bodies to reduce pollution caused due to fuel, are set to drive the demand for energy efficient transportation. The mode of transportation includes road, rail, and air. The best way of energy efficient transportation is rail, which is economical and energy efficient compared to other modes of transportation. Currently, railways are one of the modes of transport that are mostly electrified. This dependence on electricity makes railways the most energy diverse mode of transport. The regions with the highest share of electric train development and adoption are Europe and Asia-Pacific.

The International Union of Railways specified that trains are 2 to 5 times more energy efficient than road, inland shipping, and aviation. Rail is one of the world’s oldest transportation methods and continues to be one of the most energy-efficient ways to move freight and passengers. Freight rail is 11.5 times more energy efficient than trucks, and a single intermodal freight train can take up to 280 trucks or 1,100 cars off the highway. Hence, the demand for passenger rail is increasing. Furthermore, rail travel provides an efficient alternative for travelers, who want to reach their destinations without a delay and in a faster, less-polluting, safer and more efficient manner. The improvement of energy efficiency is one of the main objectives of railway companies. This is because the increase in energy efficiency leads to reduced financial costs and offers several environmental, economic, and social benefits.

Passenger transportation by railways requires lower energy than transportation by car or plane, which is why rail passenger services represented only 1% of the energy demand in passenger transportation. Passenger rail is particularly well suited for transporting a large number of passengers, while freight rail is an efficient way of transporting goods in bulk over large distances. The vast majority of rail transport is powered by diesel fuel or electricity. Electric rail systems are typically 15-40% more efficient than diesel passenger rail systems. Some regions already have well developed electric rail networks. For instance, in Europe, 80% of passenger and freight rail systems are electric-powered rails. Electric trains have several advantages over their diesel equivalents. For instance, electric trains require around 15% less energy input than diesel trains, their electric motors are also lighter and more compact than diesel engines, and they are more reliable and cheaper to maintain.

The International Energy Agency estimates global averages for carbon intensity of passenger rail to be between 30 and 60 gCO2eq/pkm (compared with 200 - 270 gCO2eq/pkm for air transport), and carbon intensity of freight rail to be 15 - 40 gCO2eq/tkm (compared with 190 - 300 gCO2eq/tkm for long distance trucking). Due to these reasons, the passenger and freight rail systems helps reduce the carbon footprint of the transportation sector.

Megatrends such as the increasing urbanization of the global population and the growing impact of climate change are creating the need for carbon-efficient rail systems. Furthermore, the increasing number of innovations in energy efficiency across the rail industry and growing consumers preference for rail transport from emerging nations are expected to shift the demand for energy-efficient transport systems from moderate to high over the forecast period.

The industrial and mining sectors are growing rapidly, due to the rapid introduction of new technologies, beneficial government regulations, and shifts in customer structure and preferences in emerging markets. Industrial and mining sectors include material handling equipment and industrial machinery for the extraction of valuable minerals or other geological materials from the earth. The geological materials that are extracted are sent to their destination through different modes of logistics. They are mostly transported by locomotive trains, due to their high load carrying capacity, long-distance travel, and cost-efficiency.

The industrial and mining activities are increasing in developed and developing regions, due to the growing industrial infrastructure, increasing manufacturing facilities, and growing commodity transportation train network. The goods transported by rail help boost local economic development. Various countries transport large amounts of mining by-products, such as iron ore and coal, as well as petroleum and chemicals. The future development of rail freight will accelerate and reach 2.4% p.a. in the period between 2020 and 2025, letting the absolute load carrying capacity rise to 263 billion ton/Km (t-km) by 2025. For instance, in South Africa, road transport is the most preferred means of transport, however, railways have a 26% participation in the transport matrix.

The growing infrastructure in countries in Asia-Pacific, especially in China, has resulted in an above-average economic growth and a significant increase in demand for commodities such as iron ore, copper and coal. The majority of the commodities are produced in China and are transported through the locomotive trains across the country. Favorable government initiatives such as fiscal incentives and coal mining policies are further aiding in industry growth. Increasing consumption of metal and mineral commodities and rise in the demand for mineral fertilizers drive the growth of industrial and mining activities in countries, such as India, UAE, Brazil, and China, where large substantial investments will be made in coal activities and oil and gas production by 2022.

Therefore, the increase in industrial and mining activity might offer opportunities for the global rolling stock market during the forecast period.

Railways are made up of complex mechanical and electrical systems. They comprise hundreds of thousands of moving parts, which make their development and maintenance complex and capital-intensive. The rolling stock system is a complex system that requires regular maintenance for improved seasonal performance and operation. The rolling stock manufacturing process costly and time-consuming and includes a lot of risks, since a lot of things can go wrong if the system is not designed properly. The cost of research and product development for rolling stock is much greater than other components used in rail systems. Due to the scale of railways as a mode of mass transit over long distances, the critical safety requirements and technical standards that are set to regulate railway operations effectively, and the need to deliver a suitably long-life, a significant amount of investment is required. The rolling stock system comprises multiple, smaller systems including bogies and wheels. The increase in the number of components in rolling stock systems can increase the overall maintenance cost of the rail system.

Rolling stock is the most maintenance intensive part of the railway system and is the most vulnerable if maintenance is neglected. The cost of maintaining rolling stock is high, owing to the daily cleaning and servicing to regular light and intermittent heavy maintenance activities. Reliability is the key to the successful operation of a railway system, and maintenance is the number one priority to ensure safety and reliability. Special facilities are required to carry out rolling stock inspections including a properly constructed building, which is capable of accommodating a whole train.

Additionally, the presence of various equipment linked with advanced technology such as software solutions and growing electrification in rolling stock system of railways, may increase the overall internal heat and maintenance cost of the rolling stock. Maintaining the ideal internal rail temperature is essential. In severe weather conditions, maintaining the proper internal climate of the rail can influence the safety of the passengers. Thus, the necessity of timely maintenance of the rail and its systems, with proper equipment upgrades, requires a significant amount of investment and acts as one of the major restraints of the global rolling stock market.

However, the growing development and increasing adoption of advanced technology including rolling stock passenger information system (PIS) help keep the maintenance costs of the rolling stock and other rail components in check. For instance, the rolling stock management system, introduced by Toshiba, collectively controls and analyzes the information by running the inspection and breakdown records for each item of the rolling stock. It also supports drawing up inspecting plans for rolling stock, which helps to reduce the overall rail maintenance cost. Thus, the impact of the high capital investment on the global rolling stock market is expected to shift from high to moderate over the forecast period.