SEPTEMBER in an even-numbered year means only one thing for the global railway industry: InnoTrans.
The 14th edition of the world’s foremost railway industry trade show will take place at Messe Berlin from September 24-27. Around 130,000 visitors from across the world are expected to visit the show’s more than 2900 exhibitors that will occupy more than 40 halls and over 3km of outside track.
The exhibition is arranged around five key themes: railway technology, railway infrastructure, public transport, interiors, and tunnel construction. Arguably, though, five other key themes and current challenges impacting the global railway industry will be the talk of Messe Berlin during the event.
The market: On the face of it, the global railway industry is in rude health. As SCI Verkehr reveals in its latest world market study, the value of the global railway market surpassed €200bn for the first time in 2023. Steady annual growth of 4% is expected over the next five years and SCI says that the challenges of high inflation caused by supply chain disruption during and after the Covid-19 pandemic, as well as high energy costs prompted by the war in Ukraine, have largely passed.
This view is supported by Knorr-Bremse, with board member, Dr Nicolas Lange, reporting a turnaround in recent performance. However, not everyone is of the same opinion. As one supplier told me, energy and material costs are still higher than they were and continue to pose problems. Companies are also stockpiling growing numbers of the components and products they need so they are better prepared in the event of another crisis, adding to the financial pressure.
There are also concerns about the general political appetite to support rail, especially in Europe, underlined by the debate over funding for Germany’s railway investment programme and concern over rising track access charges.
Governments in regions once regarded as growth drivers for global manufacturers are pursuing protectionist manufacturing policies.
Rail is generally viewed favourably for its potential to decarbonise transport. However, funding is not yet forthcoming to further develop and rollout some of the European industry’s flagship technology programmes that will facilitate modal shift, such as the Digital Automatic Coupler (DAC), the Future Railway Mobile Communication System (FRMCS) and ERTMS. The political paralysis in Brussels following this summer’s European Union Parliamentary elections, which will likely continue to the end of the year, is adding to the uncertainty and concern. Difficult choices will need to be made, especially with defence spending expected to increase, as the new director general of the European Rail Industry Supply Association, Mr Enno Wiebe, is all too aware.
This all adds up to a general note of caution. The delicate global geopolitical situation does not help. As SCI notes, some national governments in regions once regarded as growth drivers for global manufacturers are pursuing protectionist manufacturing policies. Russia is the most striking example. But there are moves elsewhere to reduce a reliance on international suppliers. Indeed, India has cancelled two fleet tenders in recent months in favour of working with domestic industry. The substantial cost of setting up shop in faraway lands is also prohibitive for some smaller suppliers seeking to follow their larger partners into new markets. There are also concerns over securing insurance for export deliveries.
The vast Chinese market has fuelled the growth of the world’s largest equipment supplier, CRRC. But, as SCI reveals, with sales of new fleets slowing down, the manufacturer is under pressure to boost exports. While it has had some success in Asia tied to China’s Belt and Road initiative, attempts to enter Europe and North America, the two other most lucrative markets, have been mixed. Its most successful venture appears to be the takeover of Vossloh Rolling Stock, which has secured a series of notable orders in recent times, taking its production plant at Kiel in northern Germany to capacity and raising questions over further expansion. Another acquisition by CRRC may be likely in the coming years.
Alstom is ranked second behind CRRC in SCI’s list of the top 10 global railway equipment manufacturers. However, not all is rosy. The French company has faced difficulties with the issues it inherited from Bombardier Transportation following the controversial takeover in 2021. It announced cutbacks at its British plant in Derby earlier this year, has sold its North American mainline signalling activities to Knorr-Bremse, and is also toying with offloading its coach and car body plant at Görlitz in eastern Germany.
Technological innovation centred on digitalisation and improved sustainability across the railway is central to Alstom’s pitch at InnoTrans. Decarbonisation is another major focus of the larger OEMs and new products and systems for alternative traction across the supply chain are likely to turn heads throughout the exhibition. The International Union of Railways (UIC) Sustainability Impact Awards will also highlight some of the notable projects that its members are undertaking.
Progress with digitalisation is less encouraging. The overarching feeling is that the rail sector has been slow to respond ever since the term landed as an industry buzzword around a decade ago.
Siemens Mobility CEO, Mr Michael Peter, like Lange, is a strong proponent of cross-industry data sharing to facilitate digitalisation. However, both bemoan the wider industry’s reluctance to realise the opportunities on offer, which for Siemens include the capability to improve the reliability and availability of rolling stock and infrastructure, as well as increase network capacity. It will be interesting to see whether thinking is beginning to shift.
The ability of rail suppliers to successfully innovate is ultimately dependent on the capability of their staff. Skills and diversity will be a major talking point at InnoTrans, with the ability to retain talent the sector’s primary human resources challenge. Events recognising the contribution of women and offering networking opportunities for younger people will present the sector as a positive and progressive place to work. It will also add to the sense of community that you feel at the global rail industry’s largest get-together.
