The Asia Pacific rail industry is being viewed globally as a multi-million dollar industry with tremendous untapped potential and is expected to be one of the high growth - high potential markets in the world. This is especially true in the case of high speed rail projects and MRT (Mass Rapid Transit) services, which require superior technical capabilities to build. Several Asian countries have collaborated with international rail infrastructure companies for their MRT projects.
The rail industry has also come a long way as a key mode of freight transportation. Key economies such as China, India, Malaysia and Australia are expected to focus their future development projects towards building their rail infrastructure for freight transportation. High fluctuations in fuel prices and increased urbanization and traffic congestion on roads have triggered the shift towards higher use of railways for freight transportation. With the rail industry across the region also queuing up to attract customers for freight movement, there certainly exists opportunities for Logistics companies, Rail Organizations, Planning bodies, ICT Solution Providers and Real Estate Solution Providers to tap a large portion of the rail freight market.
Frost & Sullivan\'s Consultant, Rohit Gunavanthe, has completed extensive analysis for the Asia Pacific Rail markets and shares his findings in this presentation.
2009 04 Growth Opportunities In Asia Pacific Rail Markets Frost & Sullivan
1. Growth Opportunities in Asia Pacific
Rail Markets: The Track Ahead
Rohit Gunavanthe, Consultant
Transportation & Logistics Practice
Asia Pacific
2nd April, 2009
2. Focus Points
1
1 Current Economic Scenario
Current Economic Scenario
2
2 World and Asia Pacific Rail Market – An Overview
3
3 Current Trends in Railway Industry
ii Passenger Movement Trends (current and expected trends)
ii
ii Freight Movement Trends (current and expected trends)
iiii
ii Technology Trends (current and expected trends)
4
4 Market Dynamics (Drivers and Challenges)
5
5 Opportunities for the Rail Industry Participants
2
3. Economic Downturn – The Recession: How it all began…
European Banks
European Banks withdraw investments in
lose money on sub eastern Europe
prime mortgages Unwinding of Yen
Carry trade & FII
withdrawals
Lower exports from
Oil prices drop on Asia due to lower
slower growth in American and
Europe and USA European demand
Withdrawal of FII
inflows: currency
depreciation
Crisis has gone global
Employment creation has hit the bottom
Industrial production has decrease significantly
Consumer spending is gradually dwindling
Credit markets still remain tight
3
4. Economic Scenario – The Recession: What lies ahead…
Unprecedented focus worldwide on addressing the economic situation
Industrial output to rebound from
recent lows
New US government to focus on
Strong demand from emerging
creating up to 2 million jobs in
Asian nations will be a factor in
infrastructure, energy, medical
reviving the global economy
technology and infrastructure
What Lies Ahead…
Easing of inflationary and liquidity pressures
Decline in commodity and oil prices leading to a tax break stimulus
Recovery of industrial output by end 2009, despite lower Automotive growth
Consumers activity, aided by fiscal stimulus, will boost industrial output, ultimately aiding recovery
Companies to focus on better & more productive means of getting products & services to their customers
4
5. Focus Points
1
1 Current Economic Scenario
2
2 World and Asia Pacific Rail Market – An Overview
World and Asia Pacific Rail Market – An Overview
3
3 Current Trends in Railway Industry
ii Passenger Movement Trends (current and expected trends)
ii
ii Freight Movement Trends (current and expected trends)
iiii
ii Technology Trends (current and expected trends)
4
4 Market Dynamics (Drivers and Challenges)
5
5 Opportunities for the Rail Industry Participants
5
6. World Rail Market revenues stood at US$284.24 billion in
2007 – Asia Pacific accounted for 23.9% of it
Passenger and freight services contributed 57.2%, rolling stock 19.0%, rail infrastructure, 14.5%, rail control systems
9.1% of total revenue
Till 2012, the world rail market is expected to exhibit an annual growth of 1.5% to 2.0%
World Rail Market
World Rail Market
($284.24 billion)
($284.24 billion)
Rail Control
Rail Service Rolling Stock Rail Infrastructure Rail Control
Rail Service Rolling Stock Rail Infrastructure Systems
($162.80 billion) ($54.05 billion) ($41.38 billion) Systems
($162.80 billion) ($54.05 billion) ($41.38 billion) ($26.01 billion)
($26.01 billion)
Asia Pacific is one of the highest contributors to world rail revenues in 2007, accounting for 23.9% of the world rail
market, worth US $67.9 billion
Asia is the most important growth market in the long term, with an estimated annual growth rate of 2% to 3%
Development of rail infrastructure and extension of routes in China and India to be major growth drivers for APAC rail
Source: Frost & Sullivan
market
6
7. Rail Market Segmentation
The rail market in Asia Pacific comprises of four market segment -
Rail Control System
Rail Control System
Rail Locomotive / /
Rail Locomotive Rail Equipment
Rail Equipment / /Technology
Technology
Coach Suppliers
Coach Suppliers Suppliers
Suppliers Suppliers
Suppliers
Railway Supply Chain Members Railway Supply Chain Members
RAILWAY
RAILWAY
ASSOCIATIONS
ASSOCIATIONS
Railway Segments Railway Segments
Passenger and
Passenger and Rolling Stock &
Rolling Stock & Railway
Railway Rail Control
Rail Control
Freight Services
Freight Services Rail Equipment
Rail Equipment Infrastructure
Infrastructure System
System
Handle passenger Represent all powered Manages all railway Is a centralised rail
and freight & unpowered vehicles related infrastructure traffic control
movement that move on a railway operations system
7
8. Focus Points
1
1 Current Economic Scenario
2
2 World and Asia Pacific Rail Market – An Overview
3
3 Current Trends in Railway Industry
Current Trends in Railway Industry
ii Passenger Movement Trends (current and expected trends)
ii
ii Freight Movement Trends (current and expected trends)
iiii
ii Technology Trends (current and expected trends)
4
4 Market Dynamics (Drivers and Challenges)
5
5 Opportunities for the Rail Industry Participants
8
9. Passenger Transportation Trends
Country Passengers Transported (Billions) Railway Network (Kilometers)
Japan 8.78 29,682
India 6.29 63,332
China 1.36 76,600
South Korea 0.99 3,472
Australia 0.62 33,819
Thailand 0.05 4,071
Malaysia 0.04 1,699
Note: Figures are as of March 2008 for the year 2007 (March 2006 to April 2007)
Japan has the highest number of passenger-to-rail network length ratio with 295,622 passenger per
kilometer.
China, though has vast network, has low passenger-to-rail network length ratio of just 16,450
passenger per kilometer.
South Korea’s rail network though considerably smaller, has the 2nd highest rail passengers-to-rail
network length ratio of 285,138 passengers per kilometer in 2008
India has the 2nd longest rail network and stands 2nd in passenger transported in 2008
9
10. Growth in Key Rail Markets across Asia Pacific
India, China and Japan expect the highest growth rates in the rail industry
Main Line Service Urban Transport Service
Passenger growth of 8.5% in 2008 Significant growth potential in Beijing,
Significant growth potential for High Shanghai, Guangzhou & Shenzhen
Speed trains (200-250 Kms/hr) Over 1,700 Kms of urban line by 2015
Significant growth potential in Delhi,
Passenger growth of 12.9% in 2008 Mumbai and Bangalore urban cities for
Significant growth potential for High Metro rail and Monorail services
Speed trains (200 Kms/hr) Available urban market of 320 million
people across India (est. 2008)
Comparatively lower growth for urban
Passenger growth of 3.0% in 2008
rail systems
Moderate growth potential for Very
14 key private operators, operating
High Speed trains (over 300 Km/hr)
urban trains over 2,000 Kms
10
11. Projected Growth in Passenger Services
Significant rail network expansion expected across in India, China, Japan, Australia,
Rail Network Malaysia and Thailand
Expansion
Rail network expansion projects throughout the region, to focus largely on Main Line
Services
High Speed to Very High Speed rail service projects to be implemented in China and
Service
Enhancement Japan
Rail infrastructure revamping includes advanced coaches, electrification, new signaling
systems to the immediate focus areas
Trans-Asia railway network to be setup by 2015 across four regions: Southeast Asia,
International
Rail Networks Northeast Asia, Central Asia-Caucasus and South Asia-Iran-Turkey
Kuala Lumpur-Singapore high speed rail network post 2012 jointly developed by the
Ministry of Transport, Singapore & Malaysia
Dedicated China, India and Thailand expected to plan for country-wide dedicated intercity and
Lines
interstate lines for passenger and freight transport services by 2012
11
12. Focus Points
1
1 Current Economic Scenario
2
2 World and Asia Pacific Rail Market – An Overview
3
3 Current Trends in Railway Industry
Current Trends in Railway Industry
ii Passenger Movement Trends (current and expected trends)
ii
ii Freight Movement Trends (current and expected trends)
iiii
ii Technology Trends (current and expected trends)
4
4 Market Dynamics (Drivers and Challenges)
5
5 Opportunities for the Rail Industry Participants
12
13. Poll Question 1
Considering that Rail is assumed to be a cheaper mode of freight
transportation, do you think the current recession would have a positive
impact on growth of the rail freight market across Asia Pacific?
Yes - significant impact
No - no impact at all
Negative – negative impact similar to other sectors
No answer – cannot conclude
13
14. Freight Transportation Trends
Country Freight Transported (Million ton per Km) Railway Network (Kilometers)
China 2379.70 76,600
India 726.00 63,332
Australia 46.04 33,819
Japan 25.32 29,682
South Korea 11.61 3,472
Malaysia 1.36 1,699
Note: Figures are as of March 2008 for the year 2007 (March 2006 to April 2007)
China with highest freight traffic, transports ~ 31,000 tons per kilometer, followed by India with ~
11,400 million tons per kilometer
Japan the most developed passenger rail network, has relatively low freight volume with 853 tons per
kilometer
Across the region, Coal, minerals, steel, fertilizers, chemicals, petroleum products, agricultural
products are most transported commodities through rail – Coal, Crude Oil and steel make up the bulk
of the rail commodities
Sustained economic growth in China and India to facilitate steady rail freight volume growth
14
15. Key Asian Rail Markets – Composition of Freight Transported
Countries Top 3 commodities Transported % of Freight
China Coal, Iron ore, Steel and Food grains 72%
India Coal, Iron ore, Steel and Chemicals 87%
Australia Crude Oil, Steel, Livestock 69%
Japan Automobiles, Auto parts, Cement 70%
South Korea Coal, Steel, Automobiles 90%
Thailand Cement, Chemicals, Fertilizers 71%
Malaysia Cement, Containers, Petroleum 83%
Cement & Steel (for construction), Coal, Iron ore and Chemicals are key commodities transported through
railways in the Asian region
All these industries are currently witnessing & expected to witness steady growth post 2010
Adoption of railways as a freight transportation mode by these sectors estimated to rise by ~ 5% by 2012
15
16. Expected Developments - Rail Freight Services
China
A high-speed passenger rail link under construction from
Beijing to Qingdao, and Shanghai
The total length of railways in operation expected to Japan
China
reach 100,000 kilometers by 2020 South
Korea
India
India Thailand
Building dedicated lines for freight trains connecting Delhi, Malaysia
Mumbai and Kolkata (north-west-east)
Indonesia
Constructing dedicated freight corridors in north-south, east-west,
east-south by 2010
Open up rail freight segment for private operators Australia
Thailand
Revamp rail freight infrastructure by 2015 for carriages, track
lines, handling personnel and so on
Strengthen freight rail link from Bangkok to Malaysia by 2012
16
17. Expected Developments - Rail Freight Services
Australia
Government to invest AUD$165.0 million to upgrade rail
connections in southern Australia
Construction of a new dedicated freight line into Sydney Japan
China
called the Southern Sydney Freight Line, which began South
in 2007 is expected to allow for the operation of freight Korea
trains into Sydney. India
Thailand
Malaysia Malaysia
Rehabilitation of 134 kilometers of railway line linking in the
Indonesia
interior of Sabah state (east Malaysia) to boost trade in East
Malaysia
Expand intercity freight line network between Penang, Kuala
Australia
Lumpur and Johor
Indonesia
PT Kereta Api to expand cargo capacity and operate more freight
trains in 17 corridors in Java, Sumatra, and Borneo, by 2010
17
18. Focus Points
1
1 Current Economic Scenario
2
2 World and Asia Pacific Rail Market – An Overview
3
3 Current Trends in Railway Industry
Current Trends in Railway Industry
ii Passenger Movement Trends (current and expected trends)
ii
ii Freight Movement Trends (current and expected trends)
iiii
ii Technology Trends (current and expected trends)
4
4 Market Dynamics (Drivers and Challenges)
5
5 Opportunities for the Rail Industry Participants
18
19. Poll Question 2
Which application of technology is likely to witness the maximum
demand for railways?
Real-Time Communication
E-Ticketing & Ticket Confirmations
Integrated CCTV Security System
Signaling System
19
20. Need for Technology Improvement –
Example of an accident and communication failure
Incident Occurs Information Gathering Incident Response Incident Solved ?
Focus on “getting trains
moving”; Passengers
information a lower priority
Information of the incident’s Fear of complaints and
impact on passengers not well lack of information
captured & handled verbally Group calls to multiple means, officials do not
stations in order to make announcements
communicate the incident,
wastes precious time
3 to 4 lines of verbal
communications before
train driver & guards
receive information
Passenger Address
Equipment on the train
has poor audibility
20
21. Need for Technology Improvement –
What is driving the demand for technology?
Key Drivers for Technology Improvements
Reliable &
Real Time Value Added
Safety Security Efficient
Communication Services
System
Eliminate
Accurate
Accident free downtime and For passengers
For Passenger information to
rail operation ensure comforts &
& Freight passengers &
system profitable connectivity
operators
operation
Communication Terrorist threat Real time feedback Efficient traffic Ticketing, mobility
application between detection, on arrival time, management while coverage, Traffic
stations, drivers & evacuation system, freight tracking achieving maximum management
other interlink rail security of freight trip
network security
personnel
21
22. Technology Assistance for Railways
Efficient train communication
Passenger Freight
system and prevention measures
Safety Avoid derailments, collisions Real-time communication for in rail operation will reduce rail
and real-time communication effective route information
accident probability to zero
Passenger
Freight Rail security management system
Security People scanning, CCTVs & are commonly integrated with
Scanning technology, Cargo &
communication (driver-stations-
coach tracking and details passenger information system
control room)
Passenger Communication System
Real Time Real time communication is the
Communication Access to schedules & real-time Accuracy to enable tracking, key to modern rail system
information security & traffic management
Urban Line Main Line
Efficiency of urban train operations
Reliable & will not only translate to profitability
Efficient System Reliable, efficient, robust to High speed technology, better to the operator but will positively
include disturbance time all-round service impact the economy
22
23. Technology Applications in Railways –
For Passenger and Freight Transportation
Benefits for Railways
Online ticketing / e-ticketing system / mobile ticketing Enhanced on-board connectivity
Waiting list confirmation via mobile phones
Passenger High passenger safety & security
Transport On-board wireless broadband internet access
Convenient ticketing & confirmation
On-board passenger information & communication
On-board CCTV Cameras for passenger safety Added revenue source
Status alerts to consignor & consignee on consignments Establish rail as a freight transport
mode
Freight Management System for effective online e-
Freight booking & e-payment Enhanced freight safety & security
Transport Online information access of freight’s schedule
Facilitate Multi-modal transportation
Freight carriage monitoring & control systems
On-board CCTV Cameras for freight security National to international freight
23
24. Focus Points
1
1 Current Economic Scenario
2
2 World and Asia Pacific Rail Market – An Overview
3
3 Current Trends in Railway Industry
ii Passenger Movement Trends (current and expected trends)
ii
ii Freight Movement Trends (current and expected trends)
iii
iii Technology Trends (current and expected trends)
4
4 Market Dynamics (Drivers and Challenges)
Market Dynamics (Drivers and Challenges)
5
5 Opportunities for the Rail Industry Participants
24
25. Railway Industry Market Drivers – Passenger Transport
KEY DRIVERS FOR GROWTH 6.8%
2.5%
Growth of GDP and resulting rapid industrial
growth
Urban Main
Rail transport price-to-cost factor (cheaper Line Line
mode of transport)
Urban Transport Growth Drivers
Need for urban transport systems is increasing
High urbanization leading to major road faster than main line services
congestion problems
Growth is mainly through ratio of passengers-
transported-per-kilometer
Increased private participation in Govt.
managed rail markets Main Line Growth Drivers
Growth in locomotives, rail control systems,
Political / Govt. support for railways across electrification and use of IP-based applications
countries for enhanced services
25
26. Railway Industry Market Drivers – Freight Transport
Trans Asia Railway Link
KEY DRIVERS FOR
GROWTH
Trans Asia Railway Link expected to increase
international freight movement by 2015
Increase in regional and global trade Asia Pacific countries covered – Singapore,
within the Asia Pacific region
Malaysia, Thailand, Cambodia, Vietnam, China,
Bangladesh, Myanmar, India and Pakistan
Rail transport price-to-cost factor (cheaper
mode of transport)
High urbanization leading to major road Singapore – Kunming Rail Link
congestion problems
To form a continuous rail link from Singapore to
China
Increased private participation in Govt.
managed rail markets – better services To facilitate multimodal transportation from
Singapore
Demand for multimodal transport – Project includes constructing railway stations
Rail a critical factor and related infrastructure such as freight depots
26
27. The Trans Asia Railway Network Map
Source: United Nations
27
28. Railway Industry Market Challenges
PASSENGER
Rising railways accidents especially during
peak hours
Passenger safety issues due to vandalism
and robbery on intercity and interstate trains
Increase frequency of trains during peak
hours and effectively manage it
FREIGHT
Freight loading and unloading time,
OPERATIONAL Lack of funds for Govt. rail operators delays overall delivery time
Lack of staff training initiatives to manage Single tracks for passenger as
advanced systems freight services delay both service
Lack of or no communication, time lag in modes
communication or too much communication Government procedures slow down
when an incident occurs – number of decision making & implementation
channels involved processes
28
29. Country Specific Challenges for Rail Freight Market
Railways in several Asia Pacific countries are subject to relatively strict government
control
Rail freight transport in several Asia Pacific countries is less popular than road
transport
Regions in the west of China do not have adequate links to the railway network
Current level of investment in rail infrastructure is inadequate to cater to the
rising demand
India
Japanese Railways have already reached saturation in terms of growth
29
30. Focus Points
1
1 Current Economic Scenario
2
2 World and Asia Pacific Rail Market – An Overview
3
3 Current Trends in Railway Industry
ii Passenger Movement Trends (current and expected trends)
ii
ii Freight Movement Trends (current and expected trends)
iiii
ii Technology Trends (current and expected trends)
4
4 Market Dynamics (Drivers and Challenges)
5
5 Opportunities for the Rail Industry Participants
Opportunities for the Rail Industry Participants
30
31. Opportunities for Railway Industry
High business opportunities for (rail) freight operators (who have ability to
partner with the primary rail operator)
Opportunities to target Logistics Service Providers
Road congestion issues leading to higher operational
costs for logistics companies
Increased business opportunities for local providers in
regional, global markets (Trans-Asia)
Rising competency in technology industry to enhance
productive for integrated rail logistics operations
High business opportunities for (rail) freight operators
(who have ability to partner with the primary rail
operator)
Opportunities for Logistics Services Opportunities for Technology Services
Deployment of latest technologies to build supply
Provide integrated and advanced chain efficiency – Freight Management System
warehousing system through Integration of rail freight systems with other logistics
container ports, inland container systems to achieve efficient integrated multimodal
depots and freight terminals logistics (similar to the shipping / aviation industry)
Multi-modal: Integration of Ocean-
Rail, Air-Rail and Road-Rail services
31
32. Opportunities for Advanced Technology in Railways
Urban rail as a freight transportation
mode
Example of an Urban Cargo Train in Zurich
Integrated communication Managed services (services
and rail control systems outsourced and managed by
across borders experts)
IP-based applications from current
GSM-R based technology
32
34. Next Steps
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Register for the next Chairman’s Series on Growth on 21 April 2009 (Tue)
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34
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35
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If you have questions or would like further information about anything we
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Account Manager
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eMail: alvin.chua@frost.com
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