“R
ail is on a roll,” according to a recent Forbes article on the state of the current railway market. Thanks to technological advances, the increasing cost of diesel and better delivery speeds, a large amount of freight traffic has moved from the roads to the rails.
This makes sense because trains are able to move 2,000 pounds of goods about 500 miles on just a single gallon of fuel, according to CSX. While rail traffic is booming, some still wonder if this is a trend that can continue. By taking a look at some of the main features of the rail market, those interested in the present and future of this industry can come to their own conclusion regarding where it is, as well as where it’s headed.
The Siemens and Alstom Memorandum of Understanding
Recently, Alstom and Siemens signed a Memorandum of Understanding that granted exclusivity to combine their mobility businesses in a merger of equals. This monumental transaction has brought together two important and innovative players of the railway market, providing superior operational potential and unique customer value. The businesses are complementary in both geographies and activities, which is something those familiar with the industry believe will be beneficial now and in the future.
Thanks to the merger, the companies will be able to offer a more diversified selection of solutions and products to help meet the specific needs of customers. This includes more cost-efficient, mass-market platforms, as well as the implementation of higher-end technologies. Additionally, thanks to the companies having a global footprint, it can begin growing in areas such as South America, India, Africa and the Middle East, where Alstom is present, and in Russia, the United States and China where Siemens is present.
The State of the Railway Market
Even though there has been a slight slowdown in the growth of the global railway market, it is still growing steadily and expected to grow by a total of 2.3 percent by the year 2020. A factor that is impacting this market growth is the fact that for the first time ever, sales are now accounting for approximately 53 percent of the total global market worth and has overtaken OEM in both growth and volume.
Additionally, the market is being affected by the fact that operators of railways are constantly under cost pressure. This has triggered the need for an optimization of processes by using digital solutions, as well as innovations in areas including consumption and energy upply.
Understanding the Impact of the Railway Industry
It is clear that the railroad system is a critically important national infrastructure. The features of this industry make virtually all other industries function seamlessly. Any disruption, even a short term one, to this industry could result in serious consequences for the U.S. economy, as well as negatively impact people from all socio-economic statuses.
While the use of the railway system has evolved and changed in the past century, there is no question that it is still a critical part of the transportation infrastructure in the U.S. and around the world.