Business | Opinion
Asia will overtake Europe as the world leader in fast trains
Over the years since France's TGV entered service in 1981, Europe has dominated the highest-profile and most glamorous section of the railway market - for trains capable of 220 kilometre per hour (kph) and more.
- By Robert Wright, Financial Times
- Published: 23:54 September 1, 2008
Over the years since France's TGV entered service in 1981, Europe has dominated the highest-profile and most glamorous section of the railway market - for trains capable of 220 kilometre per hour (kph) and more.
A key finding of the worldwide rail market study to be published this month is that in this, and many other segments of the rail industry, Asia is catching up fast on Europe.
In 2005-2007, according to the study by Roland Berger consultants on behalf of Unife, the European railway industry association, the market in Asia-Pacific for the fastest high-speed trains - capable of 300kph or more - was worth an average 1.03 billion euro ($1.51 billion) annually, against 1.19 billion euro in western Europe, its traditional heartland. Both markets are forecast to grow at 7.8 per cent annually until 2016.
Add in trains capable of up to 220kph and Asia looks set to overtake Europe soon as the world leader in fast trains - while the market for such trains is set to grow 9.3 per cent annually in Asia, it is forecast to shrink in western Europe.
Michael Clausecker, Unife's managing director, says western European-based companies are taking technologies that were invented in the region to the rest of the world.
Montreal-based Bombardier has its rail business's headquarters - the biggest rail supply business by revenues - in Berlin. The market number two and three - Alstom and Siemens - are also European. "In Asia-Pacific, we have been very successful in the first phase [of rail development] with more mass transit systems, in the second phase with our locomotives and the third phase now with our high-speed infrastructure and trains," Clausecker says.
Western Europe's technical hold over the Asian rail market is being further reinforced by the widespread adoption on new Asian lines of Europe's ERTMS signalling system, he adds.
However, with China insisting foreigners transfer their technology to Chinese partners when building trains in the country, some manufacturing will move to Chinese competitors, he accepts. "Certain segments of the market that initially have been driven by innovators from western Europe will be more and more taken over by local players," Clausecker says.
The western European market has remained the world's biggest in the past three years, according to the study, with average annual sales of equipment and services of 29 billion euro out of a total worldwide accessible market of 86 billion euro. The study excludes from the accessible market work - much of it track maintenance and replacement - which rail companies do in-house, without issuing tenders.
The 21 billion euro in annual sales in the North American Free Trade Agreement (Nafta) countries of the USA, Canada and Mexico - many of them to the region's vast rail freight operators - currently place the region second in global importance, ahead of Asia-Pacific's 18 billion euro. However, figures for the average value of orders placed in recent years - 39 billion euro annually in western Europe, 24 billion euro in Nafta and 30 billion euro in Asia - make it clear Asia will soon take over.
The Asian investment covers nearly all sectors of the rail market. Asian cities are investing heavily in metros, while there is significant investment in rail freight - India is building dedicated freight lines across the country.
However, the shifting balance of power in the high-speed sector is bound to attract most attention when Unife officially publishes the report this week. After years when the archetypal high-speed rail passenger was a traveller between Paris and Brussels, in future he or she will be going between Shanghai and Beijing.
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