In parts of Asia where there has

In examining current trends, the future of rail appears seems
to be promising. Rising demand for passenger and freight segment, along with
global concerns about environmental sustainability, is leading to revitalization
of global rail industry. Even regions that traditionally haven’t had a culture
of rail travel, such as the Gulf Cooperation Council (GCC) countries, or parts
of Asia where there has been underinvestment, are investing in rail.

There are challenges to overcome, not least in building
the needed capacity in a timely fashion and at a cost that the market can
support. The desired future for rail requires a vision for strong
implementation of technologies or change in government policies (both
international and domestic). In next few decades, passenger and freight rail
will form the critical part of the the transport system. Railways will be main
mode of intercity travels. This will create competition for air or road transport.
With evolving digitization, rail will become innovative, sustainable and
competitive.

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Urbanization

World population, by 2050, should exceed 9 billion inhabitants,
of which nearly 70% will reside in urban areas (source: UNFPA, United Nations
Population Fund). This trend towards urbanization should be particularly strong
in China, India and in the developing countries of Africa and Latin America.

The primary driver of this growth is the urban transit segment,
especially in emerging economies. This postulate a shift in historic growth
drivers away from (high-speed) mainline connections, induced by ever increasing
urbanization.

The growing urbanization should also lead to extending
transportation networks that connect big cities to smaller ones. In this
respect, it has already been proven that the high-speed train is both much
safer and consumes less energy than other transportation modes (source: CE
Delft). An increase in high-speed lines and the renewal of train fleets should
take place in both mature and emerging markets, while the creation of new
networks will create additional opportunities

As per Catalysts’, denser urban area will offer opportunities
for rail, such as metro, to reduce crowding, improve predictable transit times,
efficiency and safety of passengers. By 2030, it is expected that 60% of urban
population might prefer rail travels against road or air.

Urbanization will drive the demand for passenger rail
transport such as intercity and interurban mo­bility, and public transport in­volving
rail, metro, tram and bus transport is already capturing increased market
shares in urban and regional markets not just for commuting but also for
leisure trips, and this trend is expected to accelerate as urbanization
spreads.

Chinese dominance resulting in price pressure

CNR and CSR’s consolidation to from CRRC makes it as an
undisputed industry leader with 44 percent market share in the rail industry.
China’s political environment and strong financial support enables CRRC to
possess high export ambitions. To penetrate international market, CRRC plans to
enter the global market with highly competitive price (at times, estimated to
be 15-25 percent lower than next competitor).

International partnerships with European suppliers to
bridge the technological gaps have also assisted CRRC in making their products
competitive and expand their client portfolio. Expectations are therefore that
its competitors will increasingly concentrate on cost efficiency and continue
moving production to low-cost countries to remain capable of competing at an
attractive price level and securing profitability.

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