Smart Railways Market worth $43.0 billion by 2027
The global Smart Railways Market size is projected to grow from USD 28.9 billion in 2022 to USD 43.0 billion by 2027 at a Compound Annual Growth Rate (CAGR) of 8.3% during the forecast period, according to a new report by MarketsandMarkets™.
The railway business is not immune to the transition as the globe becomes increasingly digitized. The railway industry, seen as a relatively conservative sector in adopting technology, has also recognized the advantages of becoming digitized. Connectivity, the cloud, and artificial intelligence (AI) have emerged as three crucial areas that will form the foundation of the railway industry’s transformation as it adopts digital technology. Some of the major factors influencing this growth include the adoption of loT and automation technologies to improve the optimization of smart railways, an increase in government initiatives and Public-Private Partnerships (PPP), and technological advancements aimed at improving the customer experience.
By offering, the services segment to account for a higher CAGR during the forecast period
The demand for smart railways services is driven by the growing number of passengers each year. Software, hardware, and other technologies that make up smart railway systems redefine how train assets and rail network connectivity are employed. Information and communication technology (ICT) integration with intelligent transportation systems enables this. Rail companies depend on streamlined and reliable asset operations, maintenance, and continuously growing infrastructure to successfully meet the rapidly multiplying requirements. The increased requirement for an efficient ecosystem with a reduction of expenses is driving the segment.
By solution, the rail communication and networking segment to account for the largest market share in 2022 Smart Railways
The use of intelligent communication solutions in a variety of railway management applications aids in improving rapid decision-making for problems, including asset deployment, usage, and maintenance. For stations, control and dispatch centers, and rolling stock to communicate accurately and on time to maintain security, safety, and uninterrupted service, railroad operations must be efficient. Therefore, signalling, phone, video, and data traffic must be reliably sent over railway lines and across backbone transmission networks using railway communication systems.
Driver: Need for efficiency in rail operations
The current rail infrastructure cannot handle the rising demand for rail services; hence the passenger and freight schedules must be optimized in order to maximize throughput. The correct planning, supervision, and servicing of rail assets are necessary for a smooth rail operation. Due to downtime, maintenance schedules lower asset productivity. Due to manual diagnostics' poor success rate, this downtime is further prolonged. Rail authorities place a strong emphasis on condition-based and predictive maintenance strategies in order to increase efficiency and decrease time consumption. These solutions assist in effective asset scheduling and timely asset monitoring, hence reducing downtime. Real-time analytics are used in condition-based and predictive maintenance to reduce the need on manual diagnostics.
Opportunity: Increase in globalization and need for advanced transportation infrastructure
All aspects of railroad traffic are directly impacted by the influence of globalization. Increased speed, security, and dependability are in demand. Therefore, regardless of the distance or the number of intermediate steps required to reach the destination, the future railway transportation ecosystem must provide solutions to satisfy the demand from source to destination with a high degree of efficiency. People's needs are evolving continuously, necessitating the development of more practical travel options. Advanced PIS, advanced vehicle control systems, and other intelligent solutions can offer information on the real-time position of cars, which can be used to monitor schedule adherence and alert passengers on the whereabouts of vehicles while they are in transit. It is anticipated that passenger satisfaction will increase if reliable real-time information regarding the position and status of in-transit vehicles is made available to them.
Restraint: High initial cost of deployment
The initial cost of implementing smart railway technology is substantial. The costs associated with financing a smart railway project could be a significant barrier limiting market expansion. The implementation of smart railway technologies across regions is hampered by large capital expenditures and rising upfront installation costs. Governments and private firms are constrained in their use of cutting-edge railway technologies and solutions by the constrained existing funds for railroads. Setting up field-level equipment, replacing deteriorating infrastructure, organizing transmission networks between end users, and managing the integration of new and existing systems inside railway premises all need significant upfront investments for smart railway technology. Railway authorities are likewise extremely concerned about high operations and maintenance costs.
Challenge: Integration complexities with legacy infrastructure
The deployment of various technological components, such as hardware, software, and networks, for use in smart railway systems must be done seamlessly and in a non-disruptive manner. It may become difficult to integrate various hardware components and smart railway management software services with outdated system architecture. The development of digital infrastructure is challenging without robust pre-existing IT and qualified employees. The IT system can be completely overhauled by railroad operators, but the associated expenditures would take a long time to materialize. Due to protocol problems, legacy systems frequently cannot be integrated with newer generations of smart devices. These systems are unable to communicate effectively with more sophisticated technical systems. Integration difficulties are predicted to impede market expansion in developing regions in the upcoming years because the majority of developing nations continue to rely on their outdated infrastructure.
Europe to hold the largest market size during the forecast period
During the projected period, Europe is anticipated to have the greatest market share in the industry for smart railroads. Western European nations with well-established rail networks include the UK, France, and Germany. Several of the region’s railroad operators also make use of some of the most cutting-edge smart rail technologies. Major investments have been made by European nations to update and enhance the current rail system. Large-scale, cross-border trade and passenger transportation in Europe have been encouraged by social and trade agreements among the members of the European Union (EU). Several European nations are rapidly adopting new smart railway technologies to increase the effectiveness of the current infrastructure.
Asia Pacific to hold the highest market growth rate during the forecast period Smart Railways
During the forecast period, the Asia Pacific Smart Railways market is anticipated to expand at a considerable CAGR. The expansion of rail projects and the industry's transition to digitalization are credited to this surge. The markets for smart railways are dominated by China and India in the Asia-Pacific region. For the past several years, the Chinese government has made significant investments in the railroad industry. China's railway budget increased from USD 33.3 billion in 2016 to USD 37.5 billion in 2017. During the foreseeable term, this development is anticipated to hold steady as well. In the upcoming years, the Indian railway industry is anticipated to expand significantly as well.
Major vendors in the Smart Railways Market include Alstom (France), Cisco (US), Wabtec (US), ABB (Switzerland), IBM (US), Hitachi (Japan), Huawei (China), Indra Sistemas (Spain), Siemens (Germany) and Honeywell (US).
