The global railway market is estimated at an average annual growth increase of 2.3% until 2025 despite an 8% decline in 2020 caused by the COVID-19 crisis, the latest UNIFE World Rail Market Study says, which analysis the railway sector until 2025.
The total market volume is expected to reach EUR 204 billion by 2025, from EUR 177 billion reached at the end of 2019. The assumption is based on a rapid recovery of the market, which the study considers probable under the so-called V-case scenario.
“The rail transport market has been hit by the pandemic, which has temporarily interrupted the strong growth that we were experiencing. Nevertheless, after a challenging 2020 we are confident that the various stimulus plans together with the increasing demand for sustainable mobility solutions will lead to a solid market recovery, translating into a 2.3% compound annual growth rate between the periods 2017-19 and 2023-2025,” Henri Poupart-Lafarge, the Chairman of UNIFE, and the CEO of Alstom said.
Since the 2018 assessment, the global rail network has been extended by 23,300 km and the number of vehicles has increased by 20,000 units. Asia-Pacific and Western Europe made the largest contribution to the positive development of the global railway market with a share of 5.3% and 3.8% respectively. Compared to the last study, only the Africa/Middle East market showed a slight decline of 1.2%, while all other markets grew.
Different global developments are likely to continue to fuel rail market growth in the future. “Megatrends such as urbanisation, global population growth and growing environmental awareness will lead to higher passenger numbers, while digitalisation and automation will make the rail sector more attractive,” said Andreas Schwilling, Partner at Roland Berger, the company that conducted the study on behalf of UNIFE.
A positive rail development will also be driven by the increasing environmental awareness shown by political programmes, the road-to-rail modal shift, and the “inevitable expansion of public transport in major cities. However, public funding will need to be ensured and sustained to achieve that progress,” Schwilling explained.
Although the study highlights the rail market growth for 2025, the international trade restrictions such as shrinking accessibility in Asian markets are a threat to the growth.
As a result, the share of the world market for rail technology that remains accessible to European companies has shrunk slightly from 63% to 62% since the 2018 study. A market volume of EUR 67.1 billion remains unattainable for European companies and this could be worsened by the current economic downturn.
“The market should be equally open to all rail suppliers, whether domestic or foreign. A level playing field is crucial for efficient rail systems, and we call on institutions to ensure that competition is fair as a means of preventing any further decline in market accessibility,” Philippe Citroën, the Director General of UNIFE, said.
The sector has grown by 3.6% annually since 2017. The strongest driver was the rolling stock segment, with a rate of 6.8%, followed by rail control solutions with 4.1% and the infrastructure market with 2.3%. By comparison, growth in the services market was rather moderate at 0.9%. The “installed base” such as the number of vehicles in operation and the existing route network has also seen steady growth.
According to the study, the current annual total market is driven by services, with a volume of EUR 65 billion, followed by the rolling stock, with EUR 61.9 billion, the infrastructure, with a value of EUR 32.6 billion and the rail control segment with EUR 16.8 billion.