PDF Rapport Sci Worldwide

Worldwide Rail Market
Cologne, October 2003 Maria Leenen Mark Ding Karl Strang Nicolas Wille
SCI Verkehr GmbH, Cologne Office Phone (+49-221) 931 78-0 Fax (+49-221) 931 78-78 www.sci.de
Contents
1 2 3 3.1 3.2 4 5 6 7 8 8.1 8.2 8.3 8.4 9 9.1 9.2 10 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 11 12 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Mobility trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Growth in transport demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Infrastructurea scarce resource . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Renaissance in rail transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Deregulation driving the market worldwide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 The rail markets structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Existing inventories and structures worldwide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 The market for infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Infrastructure for the standard-gauge railway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Electrification of the standard-gauge railway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Infrastructure for urban transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Electrification of urban transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 The market for engineering systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Standard-gauge railway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Urban transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 The market for rail vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 The vehicle market in high-speed transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Electric locomotives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Diesel locomotives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Electric multiple units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Diesel multiple units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Passenger cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Freight cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Light rail vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Metro vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 The worldwide rail market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Introduction
Vossloh AG has successfully specialized in transport technology activities, particularly in high-growth niche markets of the railway industry. With a 4,600-strong workforce, the Group is a world-leading manufacturer of rail fasteners and switches as well as Europes biggest producer of diesel locomotives. Suburban railway and tram equipment also form part of this companys product portfolio, as do information technology and interlocks. The stock of this company, which is targeting sales of almost 2 billion by 2005, is listed on the Frankfurt stock exchange among the 50-member MDAX. In fact, Vossloh shares have been among the best performers in recent years. In virtually no other branch of industry has the paradigm change of the globalizing world economy been as radical as in the railway sector, the key focus of Vosslohs activities. Just a few years ago, the railway and thus the rail industry was a strategic core business of every nation state, not least owing to its military importance. It was not until the 1980s that increased transport requirements worldwide, both qualitatively and quantitatively, exposed the efficiency shortcomings of state-run railways, thus resulting in far-reaching reforms. This includes the EU Railway Package as well as the privatization wave in New Zealand or South America as well as the current reforms being carried out in Russia. The deregulation of large sections of the rail market is leadingat differing speedsto the denationalization of railway networks worldwide. Competitive advantages are facilitating access to previously closed markets and creating new opportunities for the rail industry. At the same time, competition is also growing in formerly domestic markets. The companies of the rail industry face the prospect of a fundamental strategic re-examination of their business activities and their product and services portfolio. Especially the agile and flexible SMEs with entrepreneurial vision command a sound strategic position to occupy such attractive niche markets becauseassuming that they possess sound capital fundingthey can identify and realize these opportunities far more quickly than major conglomerates. Decisions have been made to date based on either sound market intelligence of the companys own segment or the production and marketing experience gathered in familiar markets. Crucial to, for example, Vossloh AGs success in sales and development has been and remains its technical expertise in the specialized market of railway engineering. This includes product know-how and knowledge of its own customers requirements and demands. In the worldwide rail market, however, the tools of market observation and analysis familiar up to now are coming up against limiting factors. Unlike in other sectors, no sufficiently methodical surveys have been conducted in the rail industry to date which illustrate what is happening in the marketplace worldwide and make forecasts especially relating to future trends. Existing surveys are based above all on information material gleaned from sources open to the public, such as the data of UIC, the World Bank, competitors or private operators. This data is, however, still characterized by the outdated structures of state-dominated rail transport or limited by the parameters imposed by a narrowly defined problem.
The decision-making intervals in this constantly changing market are becoming increasingly short and complex. It must be possible to develop quickly and meaningfully alternative scenarios for the respective task at hand which are based on sound information and data material. It is simply not enough to keep an eye only on (ones own) familiar current markets in order to fully exploit the opportunities and potential. This approach will succeed only with a systematic, continuous and comparative observation of rail markets designed to underpin business decisions. For this reason, Vossloh AG decided at the start of 2003 to establish a structured and regular analysis of the worldwide rail industry market together with an external service provider. The Hamburgbased SCI Verkehr GmbH was chosen as the partner for this project. The company has been established as an independent rail industry expert for some years, maintaining a comprehensive international network. Any such extensive world market database needs to be continually updated. This calls for an international network of regional experts, reliable access to the railways and decision-makers and a review, annually at least, of the data and of growth forecasts and trends. This report provides for the first time a complete systematic framework for the classification of worldwide rail markets and their products and services while offering a comprehensive overview of rolling stocks worldwide and of the market shares and strategies of the players active in these markets. In addition, the chief national projects and underlying conditions as well as the central trends and development prospects are described. With this Worldwide Rail Market report, Vossloh AG is granting a selected public an insight into the approach of its systematic market assessment and into the most up-to-date findings and trends in the sector. The abridged version published shows, of course, only the very aggregative results of the market study. Beyond the findings presented here, Vossloh also possesses countryspecific data and assessments of the markets in the various segments. Based on the forecastoriented database Vossloh AG is able to continually review its orientation and its product and company portfolio in relation to rail technology, thus obtaining a transparent, sound and reliable data pool for strategic developments. In addition, the Groups subsidiaries are provided through the database with the most up-to-date market figures for the development of their own business segments.
Methodology
The survey was conducted between April and September 2003. The following served as sources of data for the survey: The evaluation of sources and statistics open to the public, such as the data of the World Bank, UIC, UITP and UNIFE, The expert knowledge of SCI Verkehr using SCI multi-client studies, including on such topics as light rail vehicles, the market for short-distance passenger transit by rail and locomotives, as well as the evaluation of SCI rail data with over 15,000 rail-related entries since 1997, An investigation of rail engineering inventories, market volumes and market trends in selected growth markets, including China, the CIS, India, and Poland. Via SCIs network, independent experts with extensive market knowledge in the particular countries were involved in this investigation through a standardized questionnaire, which contained detailed information about the individual product groups within the rail industry. The surveys findings were compared with the experience of industry insiders both in Germany and abroad. This includes independent experts but also, of course, the specialists employed by Vossloh AG and its subsidiaries as well as the companys own and associated sales organizations worldwide. The structured assessment of the current situation in the world market resulted in the creation of product-related databases in line with the product matrix as described later in this report. The databases contain country-specific data on the inventory levels, procurement volumes, and manufacturers market shares in the individual segments, based on which forecast and analysis models outlining future market trends can be worked out. Depending on the market segment, either a direct examination of the product level is carried out (e.g., with vehicles) or the demand for a product is deduced through the key data ascertained (e.g., average number of switches per kilometer of track). This survey is the aggregative representation of the results at the level of individual world market regions.
Generally, the average market activities over the past five years as well as the forecast for the next five years form the basis of the description. In individual subsegments, such as high-speed transport, the body of data available or annual fluctuations may make a different analysis period appear sensible. In this case, this analysis period is explicitly indicated. The formation of these databases is a continuous process which has not yet been completed. With the concentration on selected high-investment markets this year the foundations of the database have been laid, from which reliable estimates can be made. As the volume of data grows with the continual updating of the databases, changes in the market volumes in individual regions or subsegments are perfectly possible, however. The data contained in the survey together with the databases belonging to SCI Verkehr GmbH form the foundations of a forecast-oriented database with which Vossloh AG can continually review its strategic orientation. In addition, the database also serves to support business operations, especially in the sales area, through a constant analysis of rail projects worldwide.
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3.1
Mobility trends
Growth in transport demand
In mid-2002, there were some 6.2 billion people living on this planet. According to the latest UN population forecast, the world population is set to increase to about 9.3 billion by 2050. In the next 30 years, this growth will take place almost completely in conurbations. From 2007, there are likely to be more people living in towns and cities than in rural areas for the first time. On a global scale, the population is therefore not only growing generally but also becoming increasingly concentrated in a few locations. The world economy is growing even more strongly than the world population, especially international trade. The chief reason for this is the globalization process, which is reflected in the worldwide dismantling of trade barriers and the deregulation of economic processes. These trends facilitate an international division of labor between individual countries and regions with specific locational advantages and demand requirements, which allows the exchange of goods to rise on a massive scale generally. In the course of the past 30 years, Fig. 1: World population and world trade according to Deutsche Bank, the world- Index wide export of goods as a share of the 350 worldwide production of goods has increased from about 10 to over 25 perWorld trade in $ 300 1982 = 100 cent. The proportion of internationally 250 traded services (such as insurance or the extension of credit) has also 200 World population risen on a similar scale. Whereas the 1980 = 100 150 combined gross domestic product of all countries has increased by a moderate 100 14 percent since 1975, the volume of 1980 1985 1990 1995 2000 world trade climbed 320 percent over Sources: UNO, Fischer Weltalmanach the same period. Reaching US$4,000 billion in 2000, capital flows registered worldwide have actually risen thirty-fold. With regard to mobility, the trends outlined above lead chiefly to rapidly increasing demand for transport services. In passenger movement, as a consequence of urbanization and the increased geographical separation of life modes (e.g., accommodation, job, and recreation) associated with it, there is an increase not only in inner-city traffic and traffic between towns and the surrounding regions (e.g., in the form of commuter traffic) but also in passenger transport between various conurbations, among other things owing to changing recreational habits and the proliferating division of labor. In freight conveyance, the ever greater logistical breakdown of varying production processes is leading to increased traffic.
The transport sector, especially freight haulage, is dependent on economic factors. Stagnating or even contracting output in the economy also results in sector shrinkage. The megatrends outlined above ensure growth in transport, however, irrespective of economic cycles. In the European Union (EU) alone, passenger transport is forecast to increase between 2002 and 2015 by 17 percent and freight haulage by as much as 37 percentgiven a 1.1-percent increase in the population.1
3.2
Infrastructurea scarce resource
The key issue with the regard to the future is how demand for transportation can be met in the years ahead. The scale of growth suggests that the combined capacities of all existing modes of transport will be required in order to create a sufficient range of transport services for the future. The often still lauded competition among modes of transport is in many respects (urban traffic, for instance) a thing of the past. For this reason, all the forecasts for individual transport systems are fundamentally based on strong growth. This applies to road-based transport as well as to air transportation or sea shipping.2 Coping with this growth is the key task for the future facing every mode of transport.
Fig. 2: Worldwide transport indicators
170 160 150 140 130 120 110 Road: trucks/buses built A significant constraint on the 100 1999 2000 2001 2002 2003 2004 2005 expansion of transport services for all modes of transportation is the Sources: Boeing, Containerisation International, Standard & Poor's / figures partly projected infrastructure. This applies equally to roads, airports, ports, or railway lines. The construction and expansion of these installations is not only extremely cost-intensive but also particularly in the especially congested conurbations often barely feasible or completely impossible owing to lack of space alone. Sea: containers (TEU) Air: number of passengers
1 2
cf. Prognos AG, 2002. Since there is no uniform statistical data for the worldwide comparison of various modes of transport, Figure 2 shows the trend forecasts based on selected indicators. Direct mathematical comparability is not being claimed. For the development of rail services see the following chapter.
In Western countries in particular, due to space problems, the construction and expansion of the infrastructure is linked to planning and approval procedures which take up a lot of time or even make the relevant projects impossible, for environmental protection reasons, for example. New infrastructure is viable especially in those regions with adequate space reserves and where approval proceedings are swift as in Central & Eastern Europe. In the conurbations, at least, any expansion of infrastructure to match the expected growth in transport demand is frequently barely possible. The future range of transport services will therefore focus on the modernization and hence best possible exploitation of existing infrastructures. Reserve capacity in the networks needs to be developed. All modes of transport must increase their specific efficiency especially at the nodal points and interfaces as well as improving their intermodal interaction. The future focus will be less on competition and more on efforts to combine means of transport intelligently.
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Renaissance in rail transport
The growth in transport demand together with the infrastructure constraints have again put the railway industry increasingly at the focus of transport planners attention over the past ten years. After all, especially with regard to their infrastructure, railbound systems hold two crucial advantages: Rail networks already exist in most regions and countries, but especially in metropolitan areas; there is an accessible railway station to be found near the center of every medium-sized town, not only in Western Europe. The current utilization of the networks iscompared with the rate of utilization of roads and airports in many conurbationsrelatively low. Most of the bottlenecks occur at the junctions. But here expansion is possible with at least moderate space consumption without requiring any vast extension of the rail infrastructure. Hence, the railways have an abundance of spare capacity.
Fig. 3: Phases in rail history
1. Origins and evolution

The railways are the only mode of mass transportation and as such revolutionize the way people and goods move. For the first time ever, huge volumes can be carried economically vast distances overland. The creation of a comprehensive rail network links even small, faraway places with the nationwide network and inside the large cities, the network reaches right into the downtown areas.
2. Shrinkage and stagnation

Automobiles get to be affordable and reliable. A vast blanket of motorways facilitates private transport, allowing door-to-door road travel at consistently high speeds. At the same time, air travel is fast becoming more affordable, and airports are expanding. Rail traffic goes into a state of stall and many local and secondary rail lines are shut down.
3. Recovery and renaissance

Congested motorways slow down traffic and inflate costs. Even the major airports have reached the limits of their capacity. And infrastructure expansions are limited by available space or made extremely costly and time consuming due to preconditions to be observed. It is especially in and around the cities, on routes connecting individual conurbations and, in the case of freight, over lengthy distances, that the railways can claim two all-important advantages: an infrastructure that exists even in central locations and their abundant reserve capacities.
Moreover, the technical advantages offered by the rail system, such as its mass transportation capacity and potential for integration as well as traffic plannability, are making railbound transport attractive to many countries again.
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Rail transports greatest growth potential lies chiefly in inner-city transport operations (e.g., metro and light rail services), commuter transport, and services between towns and the surrounding region (e.g., local and regional rail links), and the point-to-point connections between individual metropolitan areas (e.g., IC/ICE services), as well as in high-capacity freight transportation. As a consequence of this trend, passenger transport by the standard-gauge railways increased between 1997 and 1999 by 5 percent worldwide, and in freight transportation by 6 percent, following a clear decline up to the mid-1990s as a result of the severe recession in Eastern Europe and in the Commonwealth of Independent States (CIS).3 The number of urban rail transport systems has also risen by 67 percent since the mid-1990s.
These figures are based on World Bank data. For the period since 1999 there is an insufficient body of data on an international scale.
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Deregulation driving the market worldwide
The former state railways were responsible not only for transporting passengers and goods but also for the vast majority of the services required for that purpose. This included the construction and maintenance of vehicles as well as the building of the infrastructure and even the management of station buildings. In some countries, such as India, this is still the case today. Virtually the whole railway industry in that country therefore belongs to the state-owned railways.
Fig. 4: Outsourcing in response to deregulation
Rail operation Engineering systems Production Maintenance Infrastructure Other services State-owned railways R&D Vehicles Property
Operators
R&D
Maintenance
Rail industry Services providers etc.
Owing to the developments described at the outset, a reform of the railways has been taking place in many countries since the late 1980s. The first great railway nation to modernize its rail industry was Japan. This reform included the break-up into various operating companies. Reform has taken place in virtually all parts of the world since then. In South America, for instance, it resulted not least because of the public sectors financial constraints in a privatization wave, especially in freight haulage. In Western Europe, EU legislation has proved to be the engine of reform. A chief consequence of virtually all reforms was the railways concentration on their core business, the actual running of their services. Depending on the prevailing ideology and the requirements in the individual countries, support functions such as the planning, construction and maintenance of the infrastructure and vehicles were or are being outsourced or privatized. In some cases, the redefinition of interaction between the individual protagonists has given rise to completely new functions, such as the leasing of rail vehicles, which was previously largely unknown in Western Europe.
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This deregulation drive is set to continue in the future, not least owing to the inherent pressures such as the increasing lack of public sector funding or the growing need for cross-border traffic. This is also borne out, for example, by the EUs current planned legislation for local public transport, which will bring deregulation for urban transport services following on from the standard-gauge railway. Numerous privatizations, which have yet to be fully completed, have also been carried out in the accession states of Central and Eastern Europe in recent years. For the companies of the rail industry the growth of their market through these reforms is currently still much more important than the overall growth in the rail segment driven by rising transport demand.
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The rail markets structure
As a result of the tendency of most national railway networks to cut themselves off from their counterparts, greatly differing structures in terms of operation and technology exist worldwide. Whereas in a comparatively large country like Germany, there is still a distinction between longdistance and short-distance passenger transport, which is even reflected institutionally in the structure of the former state railway, in its smaller neighboring countries this is often much less significant or completely irrelevant. While the differing technological requirements between urban rail transport and the so-called standard-gauge railway are even enshrined in law in Germany, such a distinction in some of the urban transport systems in South America, for example, would be hard to follow.
Fig. 5: Rail markets Standard-gauge railway Goods
Passenger
Suburban/regional
Long distance
High-speed
"Conventional" intercity
Urban rail
Light rail
Subway/metro
In order to subdivide rail transport with regard to the development of the market for rail engineering products, it is necessary to draw a fundamental distinction with the modes of traffic in the standardgauge railway between passenger and freight transportation. In passenger transportation, a further distinction can be drawn between local and long-distance traffic, with the high-speed segment within long-distance traffic being treated separately.
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All modes of traffic possess their own structure with their own requirements in terms of the relevant equipmentand correspondingly with a differing market development and relevance. If investment costs of, for example, 3 million per kilometer are sufficient for the construction of a new single-track, non-electrified railway line for freight haulage in Germany, the spending on a new ICE high-speed line can easily amount to 20 million per kilometer and more. The market survey must also draw such distinctions. At the system level in the vehicle segment alone, there are a large number of varying products with individual properties which are used in the differing modes of traffic.
Fig. 6: Vehicles and modes of transportation Goods Locomotives/freight cars Diesel locomotives Electric locomotives Suburban/regional MU Locomotives/passenger railcars High-speed MU Locomotives/passenger railcars (MU) Light rail vehicles Freight cars Passenger railcars Diesel multiple units (DMU) "Conventional" intercity Electric multiple units (EMU) High-speed MU Light rail vehicles Subway/metro Subways/metros Subway/metro vehicles
High-speed
Light rail
Based on the various modes of traffic, their requirements and product configurations, SCI Verkehr has developed a product matrix from which a worldwide analysis of the rail market is possible within the meaning of a benchmark. The product matrix has three layers of analysis: The breakdown of the rail market into various product groups, the study of these product groups with regard to the physical inventories, the annual market volume and the development of this volume and the examination of the varying geographical markets worldwide.
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Abb. 7: Rail engineering product matrix

Goods traffic Intercity passenger traffic Local passenger traffic City traffic
Vehicles
Standard-gauge railway LRV/metro
Infrastructure
Standardgauge railway LRV/metro
Engineering systems
Standardgauge railway LRV/metro
Railway infrastructure
Railway infrastructure
Telecommunications
Service/retrofit
New vehicles
Existing inventory
Annual market volume
Annual market growth
EU
C&E Europe
CIS
North America
Latin America
Asia
Australia/NZ
Africa/ N&M East
The rolling stock, meaning the vehicles themselves, the track infrastructure including its electrical equipment and engineering systems can be identified as the basic product groups in railway engineering.
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Telecommunications
Electric locomotive
Diesel locomotive
Passenger railcar
Control/safety
Control/safety
Electrification
Electrification
High-speed
Freight car
Light rail
Metro
DMU
EMU
Existing inventories and structures worldwide
With a few exceptions, rail systems exist in virtually all the countries of the world. The structure of these systems varies considerably, however.
Fig. 8: Existing infrastructure worldwide
North America 311,732 km
W. Europe 176,685 km
E. Europe 83,710 km
CIS 193,925 km
Asia 263,384 km Africa/N&M East 90,406 km
Latin America 108,474 km Australia/Pacific 63,523 km
Source: SCI Verkehr
The length of the worldwide rail network is some 1.2 million kilometers. The longest network is to be found in North America on the long transcontinental overland routes, followed by Asia and the CIS. Western Europe, by far the most important market for rail products, comes only after all of them. From the point of view of the market, however, the length of the rail network is only partially relevant. In North America, for instance, freight traffic accounts for the majority of transport operations. This means that the greater part of the railway network is single-track, not electrified and over long sections does not possess any points of intersection with other lines. In monetary terms, this means that the railway lines are of the simplest design with only small market volumes in the superstructure and very low electrification and engineering systems requirements. There is a similar situation on vast sections of the railway networks in Asia, Australia, Africa, and South America. In Europe, on the other hand, the reverse is the case. The existing rail network is closely interlinked in the densely populated metropolitan centers and used for passenger and freight transport alike. The physical demands on the infrastructure, in high-speed traffic for example, are extremely severe, requiring extensive control and safety technology for operational organization.
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The varying structures of the rail systems worldwide become clear, among other things, in the level of electrification of the individual regions.
Fig. 9: Electrification worldwide
North America 1%
W. Europe 49%
E. Europe 38%
CIS 30%
Asia 26% Africa/N&M East 12%
Latin America 3% Australia/Pacific 5%
Source: SCI Verkehr
Differences in quality demands and safety requirements also lead to variable market sizes. In Asia outside of Japan, for example, passenger transportation primarily takes place through locomotivehauled multi-unit trains with a high proportion of domestically produced passenger railcars. These latter are usually comparatively simple in terms of their engineering, keeping costs low. In contrast, much higher standards exist in Western Europe and increasingly in Eastern Europe as well.
Fig. 10: Transport by regions Rest of the world 0.2 mill. E. Europe 0.1 mill. CIS 0.2 mill. E. Europe Rest of the world 0.1 mill. 0.3 mill. W. Europe 0.2 mill.
Asia 1.2 mill.
CIS 1.5 mill.
N. America 2.4 mill.
W. Europe 0.1 mill. Asia 1.6 mill. Share in passenger traffic (in passenger-km) Share in freight traffic (in tonne-km)
Source: SCI Verkehr
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The railways are increasingly using, in passenger transportation for example, flexible railcars instead of the locomotive-hauled trains, while passengers demand quiet and comfortable compartments fitted with such facilities as air-conditioning equipment. Crucial to Western companies is the accessible or acquirable proportion of a regional market volume. In Asia outside of Japan, for example, comparatively simple vehicles in terms of their engineering are not only used to a high degree but also produced at local plants. Foreign technology is purchased chiefly in such high-tech areas as control and safety systems (e.g., in China), in the high-speed area (e.g., in Korea) or for light rail services (e.g., in Taiwan). In Europe, on the other hand, with the liberalization of rail transport, companies access to previously closed markets is growing. Competitive pressure is rising, with competitors in the rail industry repositioning themselves through mergers and acquisitions.
Fig. 11: GDP growth 19972002

% 30 25 20 15 28.5
Especially with regard to the future 10 development of the industry, the 4.0 5 growth in the respective regions of the world is also ultimately of great 0 importance. The EU accession countries C&E Europe Euroland were one of the most dynamic regions Source: EU worldwide. Linked to the railways significance in these countries and the pent-up demand as a consequence of the economic slump in the early 1990s, they are regarded as an exceedingly attractive growth market. The worldwide analysis of the railway technology market, the individual segments of which are described in the following chapters, was conducted taking all these factors into account.
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8
8.1
The market for infrastructure

Infrastructure for the standard-gauge railway
The infrastructure of the standard-gauge railway chiefly includes rails, switches and crossings, sleepers, ballast or slabbed tracks as well as fastening systems, such as clips. The greatest demand worldwide for these materials arises from the maintenance of existing rail networks. The building of new lines or the upgrading of existing sections, to allow a higher speed for example, provides significant growth impetus.
Fig. 12: The world market for standard-gauge rail infrastructure
North America 4,442 mill. +5%
W. Europe 7,734 mill. +5%
E. Europe 1,503 mill. +5%
CIS 1,977 mill. +3% Asia 4,687 mill. +8%
Africa/N&M East 400 mill. +3%
Latin America 568 mill. +2%
Australia/Pacific 381 mill. +5%
Source: SCI Verkehr
Western Europe is the most important market for such infrastructure. The reason for this is the high standard of this infrastructure, as stipulated by UIC. In addition, a comparatively high proportion of the rail network in Western Europe is double-track, with the high-speed network now comprising several thousand kilometers. On these lines the trains reach a speed of up to and over 300 km/h. The infrastructure must therefore be suitably dimensioned to absorb these loads. The decision to further expand this high-speed network represents exactly the same growth factor as the creation of European transit corridors for freight traffic. North America has the worlds largest rail network. Despite a few new projects in high-quality local and long-haul passenger transport, the railway is, however, chiefly a long-distance means of transport for freight traffic in that region. The axle loads are often much higher than in other parts of the world, even at relatively low average speeds frequently placing high demands on the track installations. However, the greater part of the lines is single-track, with the number of crossing
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points and stops comparatively small relative to the line length. The equipment requirements and thus the market volume of the North American infrastructure are moderate relative to its length. In Asia, it is necessary to distinguish between the Japanese and in parts also the South Korean market and the rest of the continent. Especially in Japan, the rail network is developed to a similarly high standard as that in Western Europe and owing to the price levels in parts has an even greater volume relative to the scale of the market. South Korea is moving toward this position not only with the expansion of its high-speed network. In large parts of Asia, however, a comparatively simple infrastructure predominates with a focus on freight transportation. The standard of these networks is low, as shown for example by the maintenance intervals. In virtually no other part of the world are new lines being planned at present on such a scale as in Asia. Even if only a proportion of this planned investment is actually realized, this will lead to substantial market growth. In Eastern Europe, the main development at present is the numerous modernization projects being planned and implemented on the pan-European corridors, as the chief East-West transport links are known. These measures are intended above all to increase the speeds on the respective lines and form part of the preparations for the entry of most of this regions countries into the European Union. Accordingly, a large proportion of the financial resources required for this purpose comes from the EU. In the accession countries at least, unlike in Asia for example, the likelihood that the plans will be implemented is comparatively high in most cases. Once the first states have been admitted in 2004, the volume of investment through EU subsidies will increase considerably once again. In the CIS, the need for an overhaul of the often ramshackle railway lines is similar, and even greater in some parts. Unlike in Eastern Europe, the funding available from international sources is much lower, however, as is reflected in the smaller current size of the market. Even though a stabilization of the economic situation in the CIS can be expected in the medium term, the growth prospects are not as promising as in the accession states of Eastern Europe. Australia has a relatively small rail network, large sections of which are used exclusively for freight transportation. Growth potential arises chiefly from the further harmonization of track gauges between the different parts of the country. Some major regional projects are also planned in Africa and the Middle East, such as the construction of a new railway line in Libya and extensions in the Maghreb states. In South America, the privatization process is resulting in the modernization of networks in individual systems.
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8.2
Electrification of the standard-gauge railway
Electrification includes the overhead wires (less frequently power rails) of the railway as well as the upstream supply systems such as traction current conductors or switchgear. The main reason for choosing electric traction is higher vehicle efficiency, which is reflected among other things in improved acceleration. This is a great advantage in suburban rail transport for example because with frequent stops and short journeys the rail systems depend on powerful acceleration. In both the construction of powerful lines for high speeds or high freight tonnages the provision of electric power for traction purposes plays a crucial role. Moreover, there are even political reasons in some cases for electrifying railway lines. Before the collapse of the communism, for example, many countries in Eastern Europe sought to reduce their dependence on crude oil imports by pressing ahead with the electrification of railway lines.
Fig. 13: The world market for standard-gauge electrification
North America 3 mill. +8%
W. Europe 719 mill. +6%
E. Europe 322 mill. +7%
CIS 409 mill. +3% Asia 683 mill. +9%
Source: SCI Verkehr
Due to its high level of electrification, Western Europe represents the largest market worldwide. In most countries the main lines are almost completely electrified, with electric traction also frequently being used in the links between towns and the surrounding countryside in major conurbations. Above all, the expansion of the high-speed network is spurring on the electrification of additional lines, leading even at the existing high level to still comparatively substantial growth in percentage terms.
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In Asia, too, the electrification of the rail network has been tackled for some years now, the aim being to increase efficiency. One of the largest projects to be completed in recent years is the construction of the new rapid transit railway ring around Beijing. Further projects include the installation of high-speed lines in South Korea or the building of Taiwans new high-speed rail link. Continued investment activity will also result in substantial growth in market volume in this region in the years ahead. After Western Europe, Eastern Europe has the highest levels of electrification worldwide. In the EU accession states, the main lines along the pan-European corridors are currently being modernized and expanded. The lines in question are all electrified. Accordingly, considerable market growth is also to be expected in this region in future. In contrast, much worse financing preconditions for the modernization of electrified main lines have to be assumed in the CIS. The just recently completed electrification of the Trans-Siberian Railway shows that the necessary measures can be implemented despite these constraints. However, the forecasts remain much more cautious generally than in Eastern Europe. In the Africa/Near&Middle East region, above all the Maghreb states, which are currently modernizing their track installations, and South Africa are striving for electrification as part of an efficient infrastructure. There are also construction plans in North and South America, chiefly in the urban conurbations in suburban transport, which result in comparatively high growth forecasts albeit from a low starting point. The extensive place-to-place connections will be mainly used for freight transport in future and are not envisaged for electrification. The size of the market compared with other regions remains very small.
8.3
Infrastructure for urban transport
Due to the shorter network length, the tracklaying market in the urban transport segment is much smaller than that of the standard-gauge railway. The market is also more heterogeneous. A tram track, for example, is integrated into the road and at other places in the light rail service segment there may be a separate trackway with its own ballast bed, the construction costs and maintenance of which are very comparable with the investment required for the standard-gauge railway. A need for rail fastening systems, for example, as with standard-gauge railways exists only in the second case. Generally, the investment volume is distributed among the over 300 tram and light rail systems as well as around 90 metro systems worldwide. Since the metro systems are usually much greater in size than the light rail vehicle (LRV) networks, this subsegments importance in track construction is almost just as great.
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Western Europe has the most systems worldwide in both the light rail and metro segments, giving rise to the largest market volume for tracklaying. This volume comes predominantly from maintenance measures, including from network expansions or upgrading. New systems are being constructed only in the light rail segment, mainly in France and to a smaller extent in the UK as well. Already at a high level, the track construction market in Western Europe is therefore advancing only at a moderate rate.
Fig. 14: The world market for LRV infrastructure
W. Europe 2.320 mill. +3%
Source: SCI Verkehr
Asia also has numerous urban transport systems, with the metro segment accounting for a much more significant share than in Western Europe. Nevertheless, there are still many cities and capitals which do not possess their own efficient urban rail network. The construction of new systems in such cities as Guangzhou in China and the Malaysian capital Kuala Lumpur has fueled the market for track construction to quite some degree. New systems and the extensive expansion of existing systems, such as the metros in Shenyang in China and Bangkok in Thailand, are also planned for the future. Even North America has seen the construction of some new urban transport systems in recent years, for cost reasons however solely in the light rail systems segment, examples being Houston and Minneapolis. The success of the new-generation light rail rapid transit systems recorded to date in the USA will lead to additional network expansions in the years to come as well as acting as a signal for those cities which still have no railbound mass transit system. Unlike Western Europe, the private sector is also involved in the financing of projects to a greater degree in the USA, for example through BOT models as in the case of Portland. This reduces the implementation periods often substantially.
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Eastern Europe has a number of often very extensive urban transport systems, some with rigorous operating standards, which place correspondingly high demands on the maintenance and modernization of the track installations. These challenges are accepted without exception and often even supported by additions to the network, meaning that a corresponding market volume can be assumed. Unlike in the standard-gauge railway segment, there is, however, much less international financial assistance currently available for the expansion of urban transport systems in the accession countries because urban transport is often perceived as a local or regional affair. For the EU, urban transport therefore differs from the international transport corridors, for example, in terms of its importance. For this reason, the forecasts in this case are somewhat more cautious than for track construction in the standard-gauge railway segment. Even greater caution is required when assessing the situation in the CIS, where apart from a few metro systems predominantly on a small scale the tram dominates as the chief mode of transportation. The networks concerned all display relatively simple engineering parameters and have been expanded at low investment and maintenance costs. Whereas in the major systems, such as in Moscow, network expansions do take place, the future of individual systems in medium-sized towns is somewhat uncertain owing to the financial preconditions. In isolated cases, the systems may well be abandoned in favor of lower-cost bus transport. Owing to the very low investment activity over the past 10 years, however, even individual measures financed from abroad lead to considerable market growth. In South and Central America and Australia as well as Africa and the Near&Middle East, there are isolated systems in a few major cities, such as Melbourne, Buenos Aires or Algiers. Due to the comparatively small market volume, expansion plans in individual systems can boost overall market growth substantially, as was to be seen, for example, with the preparations for the Olympic Games in Sydney. Known development plans, such as in Cairo, therefore often lead to a temporary distortion of the size of the market, which viewed over longer periods is more likely to remain small.
8.4
Electrification of urban transport
Urban transport systems are operated electrically almost without exception. The high transport capacity of these vehicles and their frequent stops is otherwise barely feasible. The use of vehicles with combustion engines in inner cities poses environmental problems. Their use in metros comprising largely enclosed tunnel systems is totally prohibited as a rule. Unlike with the standard-gauge railway, direct current is normally used with urban transport systems. This is for safety reasons firstly. With the overhead wires in urban areas, especially in streets, located much more closely to road traffic for example, a specific voltage600 V being most widespread must not normally be exceeded. In addition, the overhead wires in towns are usually located in the direct vicinity of the supply network. The higher loss of voltage in d.c. lines compared with a.c. lines
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is less problematic thanks to this nearby supply network, because there is a higher density of feeder points. In the standard-gauge railway, on the other hand, such a dense supply network would result in considerable extra costs. In general, the cost of the traction power supply equipment in light rail systems is thus lower than that of the standard-gauge railway, the market volume responding accordingly.
Fig. 15: The world market for LRV electrification
Source: SCI Verkehr
Since in the suburban railway segment the track infrastructure and electrification are largely linked together as a matter of necessity, the markets in these two subsegments also behave very similarly. Western Europe again represents by far the largest market in this area, ahead of Asia and North America. Exceptions exist only in a few areas. For example, slight network expansions have a greater impact on the market for tracklaying than for electrification. The reason for this is that in the case of electrification existing installations such as supply equipment can often be utilized, meaning that the additional costs are restricted to the actual overhead wires and their connection. Consequently, the percentage growth in Western Europe, which is characterized by network expansions, is slightly smaller for electrification than for the track infrastructure. In some systems, on the other hand, standard-gauge railway tracks are rededicated when networks need to be expanded, for example at a number locations in North America. The primary measure during expansion is to electrify these lines, meaning that in this case electrification accounts for slightly higher market volume growth than tracklaying.
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9
9.1
The market for engineering systems

Standard-gauge railway
The chief product groups in control and safety systems are the interlocks and signaling equipment along with the train protection and warning systems plus the required supply networks as well as the whole underlying control technology and operations control centers, not to mention the generation of the necessary software. This is to be distinguished from the telecommunications sector, which includes the railways internal telephone network as well as radio frequency communication. Control and safety technology is closely linked to telecommunications because of the transfer of the required information. Such developments as the introduction of the European Train Control System (ETCS) or of operations control technology based on electronic signal boxes will further strengthen this trend. Up to now, such technologically advanced innovations have been largely confined to Europe and a few parts of Asia. In the rest of the world, developments in these two areas are still pursued separately, with telecommunications sometimes taking on the functions of control and safety systems. With freight transportation extending over long distances in North America, for instance, train radio systems often act as a replacement for line-related signaling equipment. Accordingly, the market volumes for control and safety technology vary greatly, whereas in telecommunications a basic infrastructure is provided even in regions where network use is not so intensive.
Fig. 16: The world market for train control/safety systems (standard gauge)
Source: SCI Verkehr
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The most important market for control and safety technology as well as telecommunications remains Western Europe with its relatively well utilized networks and high safety standards. The continued increasingly intensive use of the existing infrastructure will cause demand for control and safety systems to keep rising in future too. In Germany alone, in 2002 some 22 electronic interlocks worth a total of around 500 million went into operation. This demand is supplemented by the harmonization efforts mentioned in the cross-border traffic between countries, for example through the introduction of ETCS. The two developments together will lead to continued strong growth even given the high starting level. Thanks to the merging with control and safety systems mentioned above, the market for telecommunications is also growing. An example of this is the new GSM-R information transmission system based on cell phone technology. Increased requirements in such areas as passenger information systems or advance notification of delays are supplying further growth momentum. The situation in Asia varies greatly from region to region. With the often very high-quality building projects, such as the construction of high-speed rail links in Korea or Taiwan, control and safety systems take high priority out of necessity. The market volumes in this area are correspondingly extensive. On the other hand, a large part of the transport demand is met by relatively simple systems in the standard-gauge railway segment, as in the case in India for example. The use of modern safety technology plays only a minor role here. Especially in metropolitan areas in Asia, the increasingly intensive use of the existing infrastructure with its outdated equipment in many places is almost becoming unmanageable, however, leading to serious safety risks. This gives rise to significant growth potential for control and safety systems.
Fig. 17: The world market for telecommunications systems (standard gauge)
Source: SCI Verkehr
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Eastern Europe and the CIS are in a similar position. Even though sections of the extensive network of branch lines are to be closed down for cost reasons, there is still a significant need for the upgrading of the control and safety systems on the electrified main lines serving national and international traffic. In the EU accession states, these modernization needs can be increasingly met through international assistance among other things, but in the CIS the necessary funds are lacking in many areas. A further growth factor in Eastern Europe is that the European harmonization measures aimed at inter-operability are already being implemented in this region as well, as is currently the case in Hungary and Poland. In North and South America as well as Africa, there are often extensively used and very simple network geometries with only a few junctions, reducing the need for control and safety technology and enabling the use of comparatively unsophisticated equipment, including minimum control and signaling systems. The rights of use of the respective lines at specific times are laid down through responsibilities delegated to staff and communication. The telecommunications markets of these regions are correspondingly extensive, especially when compared with their share of the market for control and safety systems. In individual regions with high traffic levels, such as Cairo, investment in higher-quality safety technology is nonetheless necessary in the medium term. Relative to the small current market size, this will lead to high percentage growth. The importance of these markets will however remain small in future. The largest supplier of control and safety systems worldwide is Siemens with an estimated share of the global market amounting to some 20 percent. Other major international suppliers include Alstom, Ansaldo Signal, and Alcatel. The structure according to which the safety functions of the equipment is calculated (interlock logic) is similar despite widely differing signaling systems internationally and will become further harmonized in some regions in the medium term. This makes it possible to design the system architecture largely in modular form. As a consequence, almost all manufacturers traditionally offer their products in uniform designs, the components of which can be grouped according to the required application, although within a unit they are usually only compatible with other components by the same manufacturer. In this way, some suppliers have been able to build up relatively strong market positions in particular regions, as reflected in Germany, for example, by system contracts between Deutsche Bahn AG and individual suppliers. The widest possible applicability of a product platform places natural limits on unrestricted prefabricated modularity. In such market structures, additional suppliers have an opportunity below these limits to offer much lower-cost solutions for particular applications, such as in the secondary network. One such supplier is Vossloh AG.
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9.2
Urban transport
The technical and operational diversity of urban transport systems is most clearly expressed in their control and safety systems. Generally, the costs in this market segment rise disproportionately as the reference system becomes more developed and its operating load increases. For this reason, metro systems with their usually more frequently operating services and faster speeds also have a greater need for control and safety technology than systems in the light rail segment. Viewed on an international scale, the regional system differences are less significant, however. Unlike in the standard-gauge railway segment, in dense urban traffic a guarantee of basic safety standards with simple minimum control and signaling systems is not possible as a rule. Consequently, the light rail rapid transit systems in North America, Africa or Australia also require high-quality control and safety technology.
Fig. 18: The world market for train control/safety systems (LRV)
Source: SCI Verkehr
Urban transport systems are for the most part operated in public roads, often allowing the control and safety technology to be combined with road traffic signals. This largely eliminates the need for additional special systems. A constant exchange of information between the vehicle and the control center, which can also cover simple control and safety technology functions, is necessary, however. This need generally explains the relatively strong position of the telecommunications market segment compared with control and safety technology, although this strength is diminishing as urban transport systems become increasingly efficient. There are also clear trends, as in the standard-gauge railway segment, of a convergence of the respective market segments.
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The largest market in this segment is again Western Europe, which has the most metro and suburban railway systems as well as safety standards that are regarded as the highest worldwide. In Asia, similar to the infrastructure situation, the development of new urban transport systems is also leading to clear growth in the volume of the engineering systems market. Singapore, for instance, commissioned in June 2003 a driverless metro system which is scheduled for further expansion. For the other regions of the world, the comments made in relation to the infrastructure apply correspondingly.
Fig. 19: The world market for telecommunications systems (LRV)
Source: SCI Verkehr
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10
10.1
The market for rail vehicles

The vehicle market in high-speed transport
There are some 1,650 high-speed and tilting trains capable of speeds of over 200 km/h in use worldwide, including about 1,000 power car/trailer and around 650 multiple-unit trains. Almost 100 new high-speed trains are purchased every year at present. At some 1.4 billion per year, the market for high-speed trains therefore represents a small but strongly growing segment in rail vehicle manufacturing.
Fig. 20: The world market for high-speed rail transport
CIS
Africa/N&M East
Asia 500 mill. +5%
Latin America Australia/Pacific
Source: SCI Verkehr
The two dominant sales markets for high-speed trains are Western Europe and Asia, with Japan purchasing multiple-unit trains exclusively to date whereas Europe has historically shown a preference for the power car/trailer alternative. This trend has modified, however, because in the past five years a large number of multiple-unit trains have also been procured for high-speed rail travel in Europe. All other continents with the exception of North America (with the Acela Express) and Eastern Europe (with tilting trains in Slovakia and the Czech Republic) have no high-speed rail products. A planned project in Australia was halted, and Russia is still in the middle of planning the MoscowSt. Petersburg line. In Turkey, the cities of Ankara and Istanbul will be linked by a highspeed line, which is to be completed by 2006.
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South America and Africa have no financial resources either at present or in the foreseeable future for this cost-intensive high-speed transport linking urban areas. In Western Europe, some 850 million is spent on the purchase of new high-speed trains annually. Spain, in particular, is investing heavily at present in expanding its fleet of high-speed trains, following on from Germany, which was the main sales market for new intercity express (ICE) trains in recent years. Italy is expected to purchase new TGV trains in future while France is to replace its existing fleet of first-generation vehicles, both on a substantial scale. Continued dynamic growth in this segment can therefore be assumed, although this will be closely tied to the commissioning of new high-speed lines. In Asia, Japan dominates the market for high-speed vehicles. Replacements for the Shinkansen trains built between 1960 and 1980 are already being phased in, although an expansion of the fleet structure is only to be expected on a small scale. On the other hand, particularly the new projects in South Korea and Taiwan as well as the high-speed network planned by the Chinese government represent considerable expansion potential for high-speed rail transport in Asia. Two prototypes of the high-speed train China Star, which is to operate at a scheduled speed of 270 km/h, have already been built. At the same time, a Japanese consortium involving Hitachi and Kawasaki is making strenuous efforts to market the Shinkansen technology in China so as to prevent Alstom (TGV) or Siemens (ICE) from entering the market. Unlike in Europe, it is difficult at present to assess the momentum of development in Asia. However, owing to the growth of Asian markets, this momentum could quickly develop into an appreciably growing sales arena for highspeed trains. The Acela Express started operating in the USA on the Boston-Washington route in 2000. Ten highspeed corridors covering some 13,400 km are planned for the USA. Up to now, 20 of the Acela trains built by Bombardier and Alstom are in use. In Canada, the construction of a high-speed line is planned, on which the Jet Train built by Bombardier is to be used. It is a power car/trailer type of train operated with a gas turbine which is to run at a scheduled speed of 240 km/h between Montreal and Toronto from 2009. It is not easy to assess the demand potential for high-speed trains in the CIS, because it depends substantially on the (currently difficult) budgetary situation facing public authorities and on the building of a new rail infrastructure or the upgrading of existing facilities. According to the Russian railway, it is expecting to need 70 to 90 high-speed trains by 2010. To date, however, only a prototype exists of the high-speed train Sokol.
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The market shares of manufacturers of high-speed trains are distributed worldwide as follows (owing to the greatly project-dependent fluctuations the units sold over the past 15 years were taken into account):
Fig. 21: World market shares in high-speed rail transport
Kawasaki/Hitachi 19%
Others 3%
Alstom 44% Siemens/Bombardier 34%

Source: SCI Verkehr
Alstom dominates the market with its TGV product, because especially in France, its home market, an extensive expansion of the high-speed network has taken place over the past two decades. In terms of the number of units of the ICE product, which was introduced on the market only about ten years ago in various consortium projects involving Bombardier (or Adtranz), Siemens is well behind. However, Siemens and especially Bombardier from their respective national locations have also supplied a large number of smaller high-speed train fleets (to Italy, Spain, Switzerland, Sweden, and so on), gaining additional market share with these products. The Japanese consortiums leadmanaged by Kawasaki or Hitachi have been supplying their domestic market since the 1960s but outside of Japan have been able to market their products only in Taiwan. However, the first extensive replacements are pending in Japan. The market share held by Japanese manufacturers may well increase in future, above all in other Asian markets. Talgo has positioned itself in the marketplace as a new supplier of high-speed vehicles. In cooperation with Bombardier, it is currently delivering 16 Talgo 350 trains to Spain. Unlike the 16 Velero trains handed over by Siemens at the same time, the Talgo 350 is a power car/trailer train with a distinctive continuous low-floor design at a height of 760 mm (above the upper edge of the rail). With the aim of reducing the procurement and maintenance costs of new-generation vehicles in European high-speed transport, the major railways in France, Germany and Italy (SNCF, DB AG and FS Trenitalia) have come together in order to develop a joint high-speed rail vehicle, known as the High Speed Train Europe (HTE).
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10.2
Electric locomotives
There are some 39,000 electric locomotives being used by railway companies worldwide. With an annual sales volume of about 2.3 billion, electric locomotives account for approximately 10 percent of the global market for rail vehicles. In addition, there are the power cars of various high-speed trains, these being examined separately in this survey
Fig. 22: The world market for electric locomotives
Source: SCI Verkehr
Western Europe alone accounts for almost half of the market for electric locomotives, making it the most promising sales arena for the major rail vehicle manufacturers, which are represented in this region with several production plants. Compared with other vehicle segments, only moderate growth is anticipated for electric locomotives within the next five years. Although private railway companies are also purchasing electric locomotives in Europe increasingly, extensive procurement projects by the major railway companies have already been completed or are already being carried out, meaning that market saturation is to be expected in this segment in the medium term. The situation is different in the Eastern European market, where a large number of electric locomotives have already reached a ripe old age. The market offers interesting prospects for the sale of electric locomotives and is after all the third-largest in this segment after Western Europe and Asia. However, it must be noted in view of the difficult financial situation facing many Central and Eastern European countries that orders for large numbers of units are not to be expected in the next few years. The large existing fleets will be used to cover requirements, as will extensive modernization projects, which have already been introduced for existing vehicles. The price sensitivity in these states will continue to play a significant role in the purchase of electric locomotives.
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This can be viewed as a competitive advantage for the domestic locomotive manufacturers from Eastern Europe or the CIS states. Traditionally, the locomotive builders from Russia and Ukraine have been successful not only in their domestic marketplace but also in Eastern Europe. At present, the situation of these manufacturers has to be assessed as difficult, however, even though locally produced locomotives are favored in Russia for the most part. There are no large-scale state projects though, and a lack of liquidity is preventing the necessary technical innovations. An attempt is therefore being made through cooperation with Western manufacturers to guarantee the necessary transfer of technology. For example, Bombardier and Siemens have already supplied vehicles to the CIS or been involved in the development of prototypes. The second-largest market for electric locomotives is the Asian region, where there are also large fleets of electric locomotives in China (11 percent of the world total) and India (6 percent), which are to be continually expanded and renewed. In procurement, local manufacturers are also usually preferred in these countries. For the globally operating systems suppliers it is therefore difficult to make inroads into these markets. They get involved mainly through joint ventures or, with small numbers, they operate successfully as independent players. Due to their low levels of electrification, both America and Australia each with an annual market volume of approx. 20 million on average represent only insignificant sales markets for electric locomotives. On the African continent, only South Africa with a fleet of almost 2,000 electric locomotives can be viewed as an interesting sales market offering promising sales potential. The major systems suppliers are positioning themselves in this region by taking on modernization projects. Generally, in terms of the development of electric locomotives it can be stated that in view of the severe slump in prices in recent years modularization strategies are being implemented most consistently in this segment. It remains to be seen whether the cost savings thus achieved and the streamlining of production processes among the major systems suppliers will improve their competitive position in the more price-sensitive markets in future. Owing to their dominance in the key Western European market, they have a hold on significant sections of the market for electric locomotives. Leading the European market is Bombardier with a share of some 40 percent, clearly ahead of Siemens with about 30 percent and Alstom with almost 25 percent on average in recent years.
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The European market shares held by the manufacturers of electric locomotivesfor the period since 2000are distributed as follows:
Fig. 23: European market shares for electric locomotives
AnsaldoBreda 4% Alstom 22%
Others 3%
Bombardier 41%
Siemens 30%
Source: SCI Verkehr
The sale of electric locomotives is highly cyclical, with major contracts from (former) state railways affecting market share considerably. This means that any examination of market shares has to be based on a lengthy period. At present, Bombardier in particular is enjoying great market success with its electric locomotives thanks to the completion of major contracts as well as a large number of orders from smaller privately owned railways. Siemens has also benefited from some major contracts in recent times but has yet to attract any follow-up orders on a significant scale. Alstom, on the other hand, is currently experiencing a sales dip following strong locomotive sales in the 1990s. However, this situation is likely to be overcome when the French state railway SNCF places new major orders in the near future, thus helping to stabilize the market shares in the electric locomotives segment.
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10.3
Diesel locomotives
There are almost 92,000 diesel locomotives in working order worldwide, which compared with other railway traction vehicles have a much longer service life on average. The market for diesel locomotives worth more than 3.5 billion on average every year thus represents a very promising market segment in rail vehicle manufacture, the third-largest after freight cars and electric multiple units.
Fig. 24: The world market for diesel locomotives
Source: SCI Verkehr
In Western Europe, the largest market potential for the sale of diesel locomotives is in Germany and France, each of which account for some 15 percent of the total diesel locomotives in the whole of Europe. The two large state-owned railways in France and Germany, SNCF and DB AG, are about to embark on a fundamental modernization of their diesel locomotive fleets. SNCF Fret, for example, plans to procure 124 diesel locomotives by 2006. Options also exist for the purchase of additional diesel locomotives, because SNCF Fret intends to buy a total of 850 new diesel locomotives in the medium term, half of which will be medium performance with the other half belonging to the highperformance class. Deutsche Bahn AG has invited bids for the delivery of 203 main-line diesel locomotives by 2006 with an option to purchase a further 263 units. Eastern European countries with large diesel fleets are Poland and Romania, each of which holds some 9 percent of the total diesel locomotives in Europe. However, owing to the uncertain financial situation in these countries, large-scale procurements are not to be expected in the near future. Especially in relation to Eastern European countries as well as many privately owned railways in Europe as a whole, it should be commented that the procurement of traction equipment will concentrate in the years ahead mainly on the modernization of existing vehicles as well as the hiring of traction units from pools of locomotives.
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In the CIS, a rising demand for diesel locomotives of up to about 230 million annually is to be anticipated in the coming years. Owing to the upcoming delivery of a large batch of locomotives to the Russian state railway, the Russian market is of interest not only to national suppliers but also to such foreign groups as General Electric. This company has, in fact, announced plans to construct a plant of its own in Russia as soon as the negotiations with the government have been successfully completed. In North America, sometimes as many as 1,000 diesel locomotives annually have been sold in recent years. Demand has now dropped slightly, causing the markets appeal to wane. This applies especially to European suppliers because the North American market with its different safety standards and two dominant operators GE and GM can be described as closed and differs greatly in terms of its structure and requirements (similar to the market in Great Britain) from the market in continental Europe. Even though the demand for diesel locomotives can be quantified at under 200 million per year in each case, South America, Africa and Australia can certainly be seen as promising future markets for diesel locomotives. In Australia, the proportion of electrified lines is very small, meaning that internal combustion traction dominates at a ratio of 7:1 for locomotives. Africa and South America represent growth markets in which various countries have acquired diesel locomotives in large numbers in recent years in order to renew their fleets. A continuation of this trend toward more intensive procurement activity can be expected at present. Asia constitutes an interesting sales market especially due to the high demand for diesel locomotives in the growth markets of China and India. Even though particularly Bombardier and Siemens have succeeded time and again in recent years in securing various contracts in Asia, it must be assumed from the high importance of the local content that the major systems suppliers are able to exploit only a small proportion of the sales potential and national operators will continue to dominate these markets.
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The European market shares held by the diesel locomotive manufacturersrelating to the period from 2000 to 2003are distributed as follows:
Fig. 25: European market shares for diesel locomotives Bombardier 3%
Alstom 10% Siemens 13%
Others 4%
Vossloh 52%
GM 18%
Source: SCI Verkehr
Vossloh has managed to boost its sales of diesel locomotives in the European market considerably in recent years and to increase its annual production to some 120 locomotives. For the past three years, Vossloh has dominated the diesel locomotive market in Europe with an over 50-percent share of the units delivered. Vossloh is followed by GM, which does not however possess its own production facilities in Europe and has been able to sell high numbers of units chiefly thanks to a major contract in the UK, as well as Siemens, which recently increased its market share through the delivery of large numbers of Rh2016-type units and is set to replace GM as the second-largest supplier in the European diesel locomotive market.
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10.4
Electric multiple units
There are almost 40,000 electric multiple units (EMUs) in use in regional and intercity transport worldwide. With an annual volume of some 4.2 billion, this market segment is the largest for railway traction vehicles and is growing chiefly owing to the urbanization of settlement structures and the increasing electrification of railbound transport. Electric multiple units are also used in high-speed transport and in metro and light rail vehicles, which are treated separately in this survey and further increase the market volume for electric multiple units.
Fig. 26: The world market for EMU
CIS 243 mill. +4% Asia 1,767 mill. +5%
Source: SCI Verkehr
Asia and Europe are the chief sales markets for electric multiple units, each with a share of the total procurement volume exceeding 40 percent. Just as elsewhere, the sales market is expected to continue to grow in the wake of increasing urbanization. In Western Europe, in particular, with an annual market volume for electric multiple units of some 1.7 billion, sales of these vehicles are gaining additional momentum because private railway companies, which have procured diesel traction units almost exclusively until now, are acting as consumers. Now that these companies also require vehicles for the operation of main lines and (electrified) partial networks, they are giving the demand for electric multiple units additional impetus. A continuation of this trend and growth of the sales market by some 4 percent can therefore be expected. In contrast, the market for electric multiple units in Eastern Europe is only one-tenth of the size as well as being still very underdeveloped. Structural changes in the railways as well as the first signs of regionalization may have begun but their effects on the procurement of new vehicles should still
42
be described as marginal thus far. In the long term, however, thanks to the operating advantages of the multiple-unit train concept over the locomotive-hauled train in individual areas of application, the proportion of electric multiple units will increase even in Eastern Europe, with the sales potential set to rise substantially. The leading market in this region is Poland with over 1,200 electric multiple units. Completely different is the situation in the Asian market, where the proportion of multiple-unit trains with electric traction is very high. With over 12,000 electric multiple units and an annual demand volume of more than 1.7 billion, this vehicle type dominates the traction vehicle market. It must be stressed that especially Japan but also India and South Korea are the chief users of electric multiple units. Whereas in the African market South Africa is the only significant consumer of electric multiple units, in South and Central America, Brazil and Argentina as well as Mexico fall into this category. The annual demand volumes on these continents as in Australia amount to 50 million and are set to rise in the years ahead by about 5 percent annually because demand in these regions will also be strengthened owing to changes in settlement structures. The same trend can be registered for North America and the CIS states, even though they each show a market volume which is four to five times that of the markets cited above. The USA and Russia are the dominant countries in this segment, however (with about 80 and 180 vehicles per year, respectively). The European market shares held by the manufacturers of electric multiple unitsin the period from 1999 to 2002are distributed as follows:
Fig. 27: European market shares for EMU Others 6%
Stadler 2% Alstom 14%
Bombardier 52%
Siemens 26%
Source: SCI Verkehr
43
The bulk of orders had been handled through consortium projects in the past, making it difficult in some cases to assign individual batches of vehicles to a specific manufacturer. If these orders are distributed on a pro-rata basis among the respective consortium members, Bombardiers domination in this market segment is nonetheless clear because it often acted as the consortium leader as well. Especially thanks to major contracts in the UK, Siemens has strengthened its second position, whereas has Alstom lost market share recently.
10.5
Diesel multiple units
There are some 15,000 diesel multiple units in operation worldwide. Even though this segment with an annual sales volume of just over 1 billion is the smallest in the railway traction vehicle sector, it is showing the most dynamic growth because multiple-unit sets are being used increasingly in short-distance passenger transit by rail in place of locomotive-hauled trains.
Fig. 28: The world market for DMU
Africa/N&M East <10 mill. +5%
Source: SCI Verkehr
Western Europe accounts for more than half of the market volume for diesel multiple units. Whereas a large number of vehicles have been procured in recent years in this region, in future Southern Europe, but especially Eastern Europe and South America, will rank among the most promising growth markets in this segment. About 200-250 diesel multiple units are delivered in Western Europe every year. Whereas the state railways of Central and Northern European countries as well as a large number of private railway companies already possess a high proportion of new vehicles in their fleets, in Southern and Eastern
44
European countries there is still a substantial need for the procurement of modern diesel multiple units. In Central and Eastern European countries an annual demand of over 50 vehicles is to be expected in the medium term. Owing to the required structural changes and the uncertainty over funding, procurement in this region has been delayed up to now. Particularly Italy, but also the Iberian states and the Czech Republic should be mentioned, however, as promising demand markets of the future. Even stronger growth of about 6 percent per year can be expected for the states of Latin America. A partial renewal of the fleet of diesel multiple units is due to take place in Argentina and in the other countries multiple-unit sets will be introduced in order to replace locomotive-hauled trains on less busy lines. Such a trend is not discernible in North America at present, where there are only individual pilot projects (New Jersey, Colorado) propagating the use of diesel multiple units. There is no sign of a sustained trend as yet. The same is true of the markets in Australia and Africa, where fewer than 10 vehicles are required on an annual average at present. For the CIS, too, only weak market growth is anticipated for diesel multiple units currently. Russia and Ukraine alone possess DMU fleets on a reasonably large scale. The partial renewal of these fleets may well be necessary but is being postponed on account of the financial situation. A closed market is also to be assumed in this case. A positive trend, on the other hand, can be observed in the Asian market, which is offering substantial growth potential especially in the medium term and currently expanding at about 5 percent per year. It comprises an annual procurement volume of almost 300 million at present, which is generated chiefly in the countries of Japan and South Korea.
Fig. 29: European market shares for DMU Others 3% Stadler 15% Alstom 35% Siemens 16%
Bombardier 31%
Source: SCI Verkehr
45
Alstom and Bombardier dominate the European market for diesel multiple units and are benefiting especially from the sale of high numbers of units in their home countries of France and Germany, respectively. In addition, Stadler and Siemens are two operators which particularly through their successful market positioning in recent years have managed to increase their market share.
10.6
Passenger cars
It is difficult to talk about a world market for passenger cars, the reason being their very simple technology. Since passenger cars do not possess traction as a rule, they age less quickly than other vehicles. Apart from their special load (e.g. friction), the driving elements are above all technology- and innovation-intensive.
Fig. 30: The world market for passenger railcars
North America 60 mill. +/-0%
W. Europe 600 mill. 2%
CIS 320 mill. +2% Asia 500 mill. +/-0%
Africa/N&M East 180 mill. +/-0%
Latin America 40 mill. 1%
Australia/Pacific 10 mill. +/-0%
Source: SCI Verkehr
Passenger cars do wear out of course. Unlike with other vehicles, however, with passenger cars, refurbishment of the vehicle is often favored in order to combat this deterioration. In the course of a passenger cars service life, virtually all its vehicle components (e.g. bogies, interior fittings) except for the chief elements such as the chassis are replaced. Even though the vehicle has been re-equipped several times in most cases during this service life, no procurements have been made over this period. This vehicle modernization is still frequently undertaken by the railways themselves, however, and with only little involvement by outsiders.
46
Especially in Western and increasingly also in Eastern Europe, locomotive-hauled trains with passenger cars are being replaced, particularly in regional transport, by power railcars which can often be operated more flexibly thanks to their own traction capability. In long-distance transportation, above all high-speed vehicles are replacing the conventional passenger cars. Market growth can be forecast solely in those countries where there is pent-up demand for passenger cars and the financial resources for the higher-cost power railcars are not always available. This is the case in the CIS above all. In Eastern Europe, however, such countries as Romania and Hungary are already favoring power cars when they place their new orders. Due to their simple technology, passenger cars are usually produced locally in all countries. Such countries as India or China continue to have a considerable need for them, with some 3,000 passenger cars still being purchased every year in China alone. These are very low-cost domestically produced railcars, which do not offer a market for Western companies. A chief exception is the double-deck variety, which has been a very successful product for Bombardier in Western Europe in recent years, for example, especially in Germany. With unit prices of about 1 million, this product is a major reason for the comparatively high market volume in Western Europe. By comparison, a simple passenger car manufactured in India costs about 90,000.
10.7
Freight cars
There are some 4.8 million freight cars worldwide, equivalent to over 90 percent of all rail vehicles. With an annual volume of about 4.3 billion, the freight car segment does not even represent a quarter of the total world market for rail vehicles, however. The reason for the relatively limited market is the low unit prices of freight cars. Individual customized designs such as car-carrier or low-loader wagons can achieve prices of up to and over 120,000, whereas widely used wagons in a standard design are much lower in cost. In Western Europe, owing to the higher technical requirements stipulated by UIC, they cost about 70,000, in North America this figure reduces to 43,000 on average, and in Russia they can cost as little as about 20,000. Due to freight transports direct dependence especially on the manufacturing sector, the market for freight cars is very cyclical, particularly when compared with the markets for rail vehicles in passenger transport. By far the biggest market for freight cars is North America. As recently as 1998, as a result of economic growth and the rising demand for transport services, over 75,000 freight cars were delivered here. As a consequence of the cyclical downswing following September 11, 2001, this figure fell to below 18,000 in 2002. In 2003, demand is already on the rise again. If a usual market volume of about 50,000 vehicles is taken as a basis for the domestic market, a figure of some 2 billion can
47
be put on the North American market. As for the long-term trend, the high procurement volume at the end of the 1990s led to very high inventories, so that all the necessary replacements will not actually be carried out in the years ahead.
Fig. 31: The world market for freight cars
North America 2,000 mill. 2%
Australia/Pacific 40 mill. +/-0%
Source: SCI Verkehr
Western Europe is a key market above all owing to the high unit prices. The fulfillment of UIC requirements raises the price of vehicle production, especially for the bogie. Despite rising investment by private operators, above all the underinvestment by state railways is allowing the total market to fall short of the necessary replacement levels. With a good 13,000 freight cars being procured every year in Western Europe, SCI Verkehr assumes an annual market volume of about 1 billion. There is still a very mixed picture in Eastern Europe. Whereas in Bulgaria the state railway intends to sell off several thousand of its existing freight cars for liquidity reasons, the Hungarian MV AG is currently seeking to hire dedicated freight cars to meet the increased demand. All in all, the market has grown substantially over the past 23 years. Considerable growth in freight transportation by rail has been registered in Asia in recent years, even though in many places there are insufficient resources to remove capacity bottlenecks. In order to meet the bulk transport requirements, simple and low-cost domestically produced wagons are used mostly. In China alone, some 30,000 freight cars have been produced annually in recent years. Based on a 10-percent growth in procurement, the market volume remains comparatively small at some 500 million, however.
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In the CIS only a proportion of the wagons on hand are in fact fit for use. In Russia alone, of the around 475,000 freight cars at the state railways disposal some 200,000 are used as a stock of spare parts rather than for transporting freight. After 1991, no actual procurements were made for over 10 years. Consequently, over 30 percent of the wagons are now more than 30 years old, and 80 percent of all wagons are regarded as defective. Since the turn of the millennium, however, the first signs of recovery have started to emerge. In 2001, privately owned companies in Russia purchased about 10,000 freight cars, and in 2002 the state railway also ordered some 1,400 wagons. Procurements on an even greater scale are budgeted. As a conservative estimate, a procurement volume of about 25,000 freight cars with a market size of some 500 million is anticipated for the whole CIS in 2003. Since freight cars are relatively simple mechanical vehicles without a drive of their own, their production is widespread. In virtually every major state-dominated market, there is at least one major manufacturer such as the Russian Uralvagonzavod or the plant in the Chinese city of Zhuzhou. The accessible market from the Western point of view is traditionally restricted chiefly to North America and Western Europe. Thanks to the changes mentioned in recent years. South and Central America, but especially Eastern Europe, have emerged as new markets. The market leaders in this bulk transport segment are the major US producers Trinity/Thrall and Greenbrier, which manufacture their products not only in the USA but also increasingly in locations with lower wage costs, such as Mexico. With the spectacular purchase of capacities in Poland, Romania and the Czech Republic, both companies have the European market firmly in their sights, although in the case of Greenbrier, which is currently winding up its European interests, the calculations proved to be overoptimistic. With the increasing liberalization worldwide, more and more previously state-owned major producers will be entering into international competition and stepping up the price pressure on simple freight cars through massive overcapacity. A large proportion of the wagons used in Western Europe already come from Eastern Europe. Western plants remain restricted to the production of high-quality custom-made designs such as chemicals and pressure tank wagons and car-carrier and low-loader container-carrying wagons. The freight car market is set to increase overall, owing to the growing demand for transport services alone. In contrast, the number of units sold may fall, however, the reason being the worldwide trend toward freight cars with a higher loading capacity through higher axle loads (above all in the USA) or more axles (mainly in Europe). Another reason for rising market growth is the trend toward high-quality special-purpose freight cars in place of simple flat or covered wagons in a standard design. Worldwide growth of 56 percent overall is certainly likely.
49
10.8
Light rail vehicles
Light rail vehicles (LRV) are primarily used on suburban railways and tramways. Whereas in the 1960s and 1970s, LRV systems were shut down in many places in Western Europe, this means of urban local transport has been experiencing a sustained and long-running revival since the 1990s. Owing to their higher service capacities (in terms of passengers in each direction) railbound systems have a clear advantage over buses. Light rail rapid transit and tram systems are also much cheaper than metro systems, where expensive civil engineering work accounts for a large part of the costs.
Fig. 32: The world market for light rail vehicles
Africa/N&M East <10 mill. +/-0%
Latin America <10 mill. +4%
Australia/Pacific 20 mill. 5%
Source: SCI Verkehr
The largest market for light rail vehicles is Western Europe. In Germany alone, there are almost 60 operators, with over 200 vehiclesalbeit with great fluctuationsbeing ordered every year. In recent years, however, France, the UK, Italy and Spain have supplied the greatest growth momentum. Unlike in Germany, there are still comparatively large towns in these countries without light rail rapid transit systems. Due to the great success of the systems built in the 1990s, further network expansions or even the construction of new systems are to be expected in this region in future. We are setting a conservative estimate of growth at a moderate 2 percent. By far the most systems and vehicles in the light rail sector are to be found in Eastern Europe and the CIS, where all in all there are some 160 systems with officially about 30,000 vehicles. If the customary procurement periods and vehicle costs for Western markets were taken as the basis for an estimate, astronomically high market volumes far removed from the reality would be the result. In fact, very few purchases have been made over the past ten years and predominantly from local manufacturers, such as Skoda. In most cases, systems were operated until they wore out or the
50
most serious deficiencies were kept under control through low-cost overhauls. In Eastern Europe especially, this picture has changed recently. The projects in Poznan und Ldz show that Western type vehicles are preferred in the long term in these countries, too, and the financial basis is consolidating owing to economic growth. In future, markets with exceedingly favorable growth prospects will develop here, especially in the CIS, but still at a low level for the time being. North America has developed into a genuine boom market for LRV in recent years. Especially in the USA, the land of the automobile, it was recognized in many places that inner-city traffic congestion could no longer be dealt with using conventional means, above all motorcars. Extensive new systems and the upgrading of existing systems, in Calgary, Salt Lake City or Houston for example, have not only greatly boosted the vehicle market in the past but also serve as a model for cities with similar plans. We are setting a conservative estimate of at least 4-percent growth in this region. In Asia, too, the inner-city traffic problems are leading to increased demand for rail-based solutions. Owing to the size of the cities, an even more efficient metro system is preferred in many places in this region. However, light rail rapid transit projects are being tackled in isolated cases, such as in Taipei or Kuala Lumpur. Worldwide the LRV market comprises an annual volume of some 1.1 billion. We are setting a cautious estimate of 3-percent growth for the next five years. The most important manufacturer worldwide is Bombardier Transportation. As the pioneer of standardization, Siemens has lost significant market share in its domestic German market but gained acceptance internationally, having secured over 500 orders for its Fig. 33: World market shares in light rail vehicles standard Combino vehicle. Alstom has % benefited greatly from the light rail 40 services boom in France but is not yet 35 well represented internationally. Vossloh Kiepe has not acted as an OEM 30 to date and was therefore not considered 25 in this survey. Overall, the data records 20 15 from often closed markets such as China and Japan are not yet compre10 hensive. The share of local manufacturers 5 is therefore presumably somewhat 0 higher than estimated here. Bombardier Siemens Alstom Ansaldo Others
Source: SCI Verkehr
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10.9
Metro vehicles
Similar to the light rail and tram systems, the market for metro vehicles is also benefiting from the growth of urban conurbations and the associated increase in commuter traffic. Metro systems differ from light rail vehicle services in two chief respects: As a closed system (underground as a rule) metro services have no intersection points with other traffic. They can therefore operate at closer intervals and with higher average speeds, making them much more efficient than LRV systems. The vehicles are consequently heavier and at the same time more powerful. Owing to these characteristics, but also because of the civil engineering work required, metro systems are much more cost-intensive than LRV systems.
Fig. 34: The world market for metro vehicles
Africa/N&M East
Australia/Pacific
Source: SCI Verkehr
As the name suggests, metros are most suitable in densely populated metropolitan areas with a need for an extremely efficient means of public transport. There are some 90 metro systems in operation worldwide, most of which are in Western Europe (25) and Asia (24), ahead of North America (13) and the CIS (12). Specific systems, such as the people movers that are often used to take passengers to and from airports, are not taken into account in these figures. There are great variations, however, in the size and sophistication of metro systems. Taking market aspects into account, the major Western systems in such cities as New York, London, Paris or Berlin continue to dominate. Japan with its nine systems is also a very significant though largely closed market. New systems have been built almost exclusively in Asia in recent years, because it has
52
numerous cities with over a million inhabitants which are dependent on such an efficient means of urban transport. The wage-intensive civil engineering work involved is also still more feasible in Asian countries, above all China, than in Western industrialized nations. In the West, such as in the case of the USA or the traditional metro country France, LRV systems are now being built chiefly. No new networks are being built in the metro systems segment, but some existing networks are being upgraded and extended. The dominance of the major Western systems is reflected in the market share distribution among the leading system suppliers, namely, Alstom (Paris, London) and Bombardier (New York, London).
Fig. 35: World market shares in metro vehicles
% 45 40 35 30 25 20 15 10 5 0 % Bombardier Siemens Alstom Ansaldo Japanese comp. Others
Source: SCI Verkehr
Siemens, on the other hand, has established itself as a turnkey supplier especially for new systems while also increasingly taking on the role of vehicle supplier (e.g. in Guangzhou, China). Japan has several domestic suppliers which dominate the home market but are barely effective abroad, the chief exception being Kawasaki in the USA.
53
11
The worldwide rail market
Based on the analysis of markets in individual countries, SCI Verkehr estimates the worldwide rail market at currently about 56.7 billion per annum. The annual growth over the next five years for all regions and submarkets is assessed at about 4 percent. Even though the infrastructure and vehicles form the biggest individual markets, the fastest growing subsegment is engineering systems. This also illustrates the great challenges facing the intelligent organization of rail traffic in the future.
Fig. 36: The world market for railway engineering by segments Engineering systems 5.9 bill. +6%
Vehicles 22.2 bill. +3%
World market 56.7 bill. +4%
Infrastructure 28.6 bill. +5%
Source: SCI Verkehr
Western Europe will remain the most significant market for rail industry products. The growth in transport demand described will continue to ensure substantial growth in market volume. In absolute terms, this growth is the biggest worldwide but owing to the regions high stock levels is moderate in percentage terms. Asia is also of outstanding importance with its enormously extensive rail networks. However, demand for solutions from Western manufacturers exists only in subsectors within this region. In many markets mass transportation exists in the form of very simple solutions which can be provided by domestic manufacturers at low cost, such as in freight transportation in China or India. The greater part of the markets in individual countries is largely closed to Western suppliers. Exceptions exist in areas where high-quality solutions are needed which cannot, however, be provided by domestic suppliers.
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Fig. 37: The world market for railway engineering by regions
+4% yearly 21.47

+3% yearly 4.86
25.91
+3% yearly
+5 % yearly 4.51 5.6 1
4.16
9.42
10.77
CIS
+6 % yearly
18.66
E. Europe W. Europe
13.73
North America
55
+3% yearly 1. 38 1. 51 1. 60 +3% yearly
1. 29
Asia
Africa/N&M East
Latin Amerika
0.82
+4% yearly 1.00
Australia/NZ
Source: SCI Verkehr
This is especially the case with engineering systems as well as in some specific segments, such as high-speed transport or in some instances in the metro sector. Substantial growth is to be expected in this area due to the rapid pace of development. North America is of interest to European manufacturers chiefly in those segments where there is pent-up demand compared with Europe, as is the case in passenger transport. Significant market opportunities exist for foreign companies in suburban standard-gauge railway transport, in the light rail rapid transit segment and in high-speed transport. The dominant freight transport segment, on the other hand, with its specific North American volume-dominated character is already well covered by domestic manufacturers. Eastern Europe and the CIS offer the most interesting prospects worldwide. After railway transport suffered a drastic slump in the early to mid-1990s, the first signs of recovery are already starting to emerge above all in the accession states. In Hungary, for instance, both freight and passenger transport services have been rising again since 1996, whereas other countries, especially in the CIS, will need a few more years for this process. Due to scarce financial resources, very few or no procurements were made in these countries in the 1990s, in which the railway still represents the backbone of distribution in many transport areas. As a result of this situation, both the infrastructure and rolling stock are in a state which makes investment urgently necessary despite the shortage of available funds. In the EU accession countries, investment has increased over the past 2-3 years chiefly in the form of EU subsidies. The first large-scale invitations to bid for the upgrading of main lines are currently being put out, with a clear increase in vehicle orders also being registered. As the locomotive and power car procurements in Hungary and Romania show, high-quality products from Western suppliers are being opted for increasingly. This is not least linked to the fact that some of the funds for capital investments come from the EU. For this reason, the forecast for the Eastern European market in the next five years is comparatively optimistic. For the CIS, such growth in market volume will presumably occur in the years that follow. Australia and South America remains comparatively small markets with promising growth in individual segments. In South America, the main such segment is freight transportation which owing to the privatizations of recent years in such countries as Argentina and Brazil has gained new scope for investment. In Australia, the harmonization of regionally differing network structures is leading to growth chiefly in the infrastructure.
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12
Summary
The rail market will remain an exceedingly attractive future market for those companies which possess specialized experience and proven expertise as well as the required certifications in this segment and are able to adapt to the increasing internationalization of markets. This favorable assessment is based on the following findings: Thanks to the rising demand for mobility, worldwide rail traffic is also growing, as is the demand for railway technology products and services; Through the opening-up of world markets new transport routes are being created and existing routes largely renewed and modernized as part of extensive national and supranational investment programs. This will create continuous significant growth for the foreseeable future, including for the rail sector; Thanks to the deregulation of rail traffic, the market volume for private sector companies is rising even more strongly not least because of reform and procurement bottlenecks, similar to the situation that existed in telecommunications or the energy supply industry in recent years. Railway technology is a specialized market with specific requirements, which result chiefly from high safety standards linked to the transportation of passengers and goods. Technical expertise together with the required certifications are the basic capital of the companies operating in the rail industry. In a relatively restricted (world) market with a limited total volume, this creates very high entry barriers which deter newcomers or those coming in through the back door from other industrial sectors while benefiting established specialists.
In the world market for rail equipment, average growth rates of about 4 percent will continue to be realized, although this is only a mean value. Especially in Western Europe, the largest and most attractive market for railway technology products, there are signs in some countries of a stretching and reduction of public investment budgets due to continued economic problems. Nevertheless, major transport schemes always represent national prestige projects as well, which as in the case of high-speed lines, for example, are treated as a priority. In contrast, in the same countries against a background of increasing competition for the operation of lines and networks in both municipal and rail transport the successful players are investing heavily in measures aimed at boosting the appeal and efficiency of the railway system. In the EU accession states, large-scale financed investment is about to be effected in the infrastructure especially. In Asia, capital spending is focusing on efforts to cope with local urban transport as well as commuter traffic between towns and the surrounding areas, with some high-speed rail links also being funded.
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In summary, it can be concluded that the developments in the individual countries and regions will very much vary in pace depending on national policy, procurement programs and prioritization. For the rail industrys manufacturers, perceiving these trends in good time, assessing them correctly and taking them into due account are crucially important to their success or failure. Through a consistent analysis of market trends with a substantiated assessment of the underlying national conditions and priorities as well as an evaluation of the respective financing solutions, it is possible to create a valid early warning system for operating in these markets very successfully. Vossloh has broken new ground with this consistent approach, which other companies in the sector must also follow in future so that they too can hold their own in the long term in a world rail market that is becoming increasingly complex.
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www.vossloh.com
Vossloh AG Vosslohstrasse 4 58791 Werdohl, Germany P.O. Box 18 60 58778 Werdohl, Germany
Phone (+49-2392)52-0 Fax (+49-2392)52-219

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Worldwide Rail Market

Infrastructurea scarce resource

Renaissance in rail transport

1. Origins and evolution

2. Shrinkage and stagnation

3. Recovery and renaissance

Deregulation driving the market worldwide

Rail industry Services providers etc.

The rail markets structure

Abb. 7: Rail engineering product matrix

Annual market volume

Annual market growth

Africa/ N&M East

Existing inventories and structures worldwide

North America 311,732 km

Asia 263,384 km Africa/N&M East 90,406 km

Latin America 108,474 km Australia/Pacific 63,523 km

Source: SCI Verkehr

Asia 26% Africa/N&M East 12%

Latin America 3% Australia/Pacific 5%

Source: SCI Verkehr

Asia 1.2 mill.

CIS 1.5 mill.

N. America 2.4 mill.

Fig. 11: GDP growth 19972002

The market for infrastructure

North America 4,442 mill. +5%

W. Europe 7,734 mill. +5%

E. Europe 1,503 mill. +5%

CIS 1,977 mill. +3% Asia 4,687 mill. +8%

Africa/N&M East 400 mill. +3%

Latin America 568 mill. +2%

Australia/Pacific 381 mill. +5%

Source: SCI Verkehr

Electrification of the standard-gauge railway

North America 3 mill. +8%

W. Europe 719 mill. +6%

E. Europe 322 mill. +7%

CIS 409 mill. +3% Asia 683 mill. +9%

Africa/N&M East 17 mill. +3%

Latin America 3 mill. +5%

Australia/Pacific 5 mill. +3%

Source: SCI Verkehr

Infrastructure for urban transport

North America 222 mill. +4%

W. Europe 2.320 mill. +3%

E. Europe 150 mill. +3%

CIS 40 mill. +2% Asia 703 mill. +5%

Africa/N&M East 20 mill. +5%

Latin America 113 mill. +2%

Australia/Pacific 19 mill. +2%

Source: SCI Verkehr

Electrification of urban transport

North America 57 mill. +5%

W. Europe 647 mill. +2%

E. Europe 81 mill. +3%

CIS 10 mill. +2% Asia 342 mill. +5%

Africa/N&M East 6 mill. +1%

Latin America 33 mill. +3%

Australia/Pacific 4 mill. +3%

Source: SCI Verkehr

The market for engineering systems

North America 208 mill. +1%

W. Europe 1,230 mill. +5%